[Federal Register Volume 64, Number 91 (Wednesday, May 12, 1999)]
[Proposed Rules]
[Pages 25462-25464]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11976]


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 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. 64, No. 91 / Wednesday, May 12, 1999 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 29

[Docket No. TB-99-02]


Tobacco Inspection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Department is proposing to revise the regulations for 
flue-cured tobacco to more accurately describe tobacco as it presently 
appears at the marketplace. The revision would add a special factor to 
the grademark to identify any lots of baled flue-cured tobacco not 
opened for inspection. This would allow a distinction between lots that 
are opened for inspection and lots that are not opened for inspection. 
Additional bale dimensions and space requirements would be established 
for uniform marketing display in the warehouses. To take into account 
the marketing of bales, a revision would also be necessary in the 
poundage adjustment for a warehouse selling in excess of the sales 
schedule and for undesignated producer tobacco.

DATES: Comments are due on or before June 11, 1999.

ADDRESSES: Send comments to John P. Duncan III, Deputy Administrator, 
Tobacco Programs, Agricultural Marketing Service (AMS), United States 
Department of Agriculture (USDA), Room 502 Annex Building, PO Box 
96456, Washington, DC 20090-6456. Comments will be made available for 
public inspection at this location during regular business hours.

FOR FURTHER INFORMATION CONTACT:
John P. Duncan III, Deputy Administrator, Tobacco Programs, AMS, USDA, 
Room 502 Annex Building, PO Box 96456, Washington, DC 20090-6456. 
Telephone (202) 205-0567.

SUPPLEMENTARY INFORMATION: Notice is hereby given that the Department 
proposes to amend regulations under subpart B, regulations; subpart C, 
Standards, and subpart G, Policy Statement and Regulations Governing 
Availability of Tobacco Inspection and Price Support Services to Flue-
Cured Tobacco on Designated Markets, pursuant to the authority 
contained in the Tobacco Inspection Act of 1935, as amended (49 Stat. 
731; 7 U.S.C. 511 et seq.).
    This proposal was based on a research project conducted by AMS and 
recommendations made by the industry to revise the regulations to 
better adapt flue-cured bale inspection into the current marketing 
system. On December 30, 1998, the Flue-Cured Tobacco Advisory Committee 
(FCTAC) met and reviewed recommendations from the tobacco industry on 
the flue-cured bale as an alternative packaging method. The 
recommendations made by the FCTAC have been included in this proposal 
for regulatory action. The proposed revision would add a special factor 
to the grademark to identify lots of flue-cured tobacco not opened for 
inspection, establish dimension and spacing requirements for marketing 
display of bales, and revise the poundage adjustment for a warehouse 
selling in excess of the sales schedule.
    Flue-cured tobacco has been traditionally marketed in a sheet with 
a maximum weight of 275 pounds. The dimensions of the sheet is 8 feet x 
8 feet and is composed of burlap or other synthetic materials. The 
tobacco is arranged in a circular pattern on the sheet and the corners 
are tied diagonally for handling purposes. The lot of sheeted tobacco 
is approximately 4 feet in diameter.
    The tobacco industry has experimented with the bale as an 
alternative packaging method for marketing flue-cured tobacco during 
the past 3 years. This alternative package is a 42-inch wide  x  42-
inch high  x  40-inch long bale weighing approximately 750 pounds. The 
bale is compressed together and bound by metal wires. The FCTAC 
recommended bale dimensions of 42 inches  x  42 inches  x  40 inches.
    The current regulations under the Tobacco Inspection Act do not 
specifically restrict baling as a packaging method for flue-cured 
tobacco. However, the current regulations do require that an official 
grade determination be based on a thorough examination of a lot of 
tobacco. A minimum of three locations within a lot is required to be 
sampled to show the range of the entire lot. However, the buying 
segment of the tobacco industry has opposed opening bales citing 
integrity issues. Without the ability to examine the interior of the 
bale for such conditions as doubtful keeping order (high moisture 
level), damaged tobacco, or nesting (inferior quality tobacco), an 
accurate grade determination could not be assured.
    During the 1998 flue-cured marketing season, Tobacco Programs 
conducted a research project on marketing flue-cured tobacco in bales. 
The research focused on the grade and condition of flue-cured baled 
tobacco from the beginning to the end of the marketing process. 
Research data was collected at the farm level as the tobacco was 
compressed into a bale, at the auction warehouse before and during the 
day of sale, and at the processing facility as the bale was 
disassembled.
    The purpose of the research project was to determine if significant 
variations existed between the exterior and interior of the flue-cured 
bale that would impact the official grade standards. The findings 
indicated there was no significant variation in grade and condition 
observed. However, USDA inspectors were present at the farm to observe 
tobacco being placed into a bale and the potential to conceal inferior 
quality tobacco was eliminated. Furthermore, the practice of nesting 
(concealing inferior quality tobacco) has been a problem in the past 
and it is expected that this problem will be present in the future. 
Without opening a bale and examining interiors, an accurate grade 
determination is not assured. Since flue-cured tobacco is and will 
continue to be marketed in both the sheeted and bale packages, we 
believe that a distinction needs to be made between lots that are not 
opened for inspection. Making such a distinction would contribute to 
grading accuracy and assist in maintaining program integrity. In the 
event that a problem exists regarding the quality or condition of the 
interior of the bale, a buyer would have to resolve the matter with the 
producer or the commissioned warehouse operator.
    Accordingly, the Department is proposing to revise the regulations 
for flue-cured tobacco to more accurately describe tobacco as it 
appears at the

[[Page 25463]]

marketplace. This proposal would revise the current tobacco regulations 
to allow the inspection of bales of flue-cured tobacco without the bale 
being opened for inspection. Further, this proposal also provides that 
the inspection of unopened bales would be distinguished from opened 
bales by adding the special factor ``B'' to the grademark.
    All lots of tobacco that are subject to mandatory inspection on a 
designated market should be made accessible to perform grading 
activities. The recommendation was made that each lot of baled flue-
cured tobacco displayed for sale on auction warehouse floors be placed 
in rows end to end so the open side of the bales are facing the aisles. 
Also, a minimum space of 30 inches between the rows with the distance 
between lots of tobacco within the row shall be no less than 12 inches 
between immediately adjacent lots was recommended. These two spacing 
proposals would promote the orderly marketing of baled tobacco by 
providing a uniform marketing display in the warehouse. This would also 
provide accessibility for inspection of the bales.
    An additional proposed revision would increase the poundage 
adjustment of 2,500 pounds by doubling the poundage amount for a 
warehouse selling in excess of the daily sales schedule. For example, 
2,500 pounds would become 5,000 pounds and 5,000 pounds would become 
10,000 pounds. The same would be applicable to undesignated producer 
tobacco, with 500 pounds becoming 1,000 pounds and 1,000 pounds 
becoming 2,000 pounds. This action is being proposed because the bale 
weight is approximately three times as much as tobacco marketed in 
sheets. This would give the farmers a chance to complete selling their 
lots of tobacco when the daily sales schedule has been depleted. This 
proposal should meet industry needs for marketing tobacco in bales.
    This 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.
    This proposed rule has been reviewed under Executive Order 12866, 
Civil Justice Reform. This action is not intended to have retroactive 
effect. This proposed rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule. There are no administrative procedures which 
must be exhausted prior to any judicial challenge to the provision of 
this rule.
    Additionally, in conformance with the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), full consideration has been 
given to the potential economic impact upon small business. All tobacco 
warehouses and producers fall within the confines of ``small business'' 
which are defined by the Small Business Administration (13 CFR 121.601) 
as those having annual receipts of less than $500,000, and small 
agricultural service firms are defined as those whose annual receipts 
are less than $3,500,000. There are approximately 190 tobacco 
warehouses and approximately 30,000 producers. The Agricultural 
Marketing Service has determined that this action would not have a 
significant economic impact on a substantial number of small entities. 
This proposal would add a special factor to the grademark to identify 
any lots of baled flue-cured tobacco not opened for inspection. This 
change would provide a distinction between lots that are opened for 
inspection and lots that are not opened for inspection. Accordingly, 
this change would more accurately describe tobacco as it appears in the 
marketplace and would assist in maintaining program integrity. 
Additional bale dimensions and space requirements would be established 
for uniform marketing display in the warehouses and would provide 
accessibility for inspection of the bales. A revision would also be 
made to the poundage adjustment for a warehouse selling in excess of 
the sales schedule and for undesignated producer tobacco in order to 
take into account the marketing of bales. These changes would apply 
equally to both small and large entities and they would take into 
account the marketing of flue-cured tobacco as it presently appears in 
the marketplace.
    All persons who desire to submit written data, views, or arguments 
for consideration in connection with this proposal may file them with 
the Deputy Administrator, Tobacco Programs, AMS, USDA, Room 502 Annex 
Building, PO Box 96456, Washington, DC 20090-6456. A 30 day comment 
period is provided for comments. This period is deemed appropriate 
because the flue-cured tobacco marketing season is expected to begin in 
mid-July and these changes, if adopted, should be made effective as 
soon as possible.

List of Subjects in 7 CFR Part 29

    Administrative practice and procedure, Advisory committees, 
Government publications, Imports, Pesticides and pests, Reporting and 
recordkeeping requirements, Tobacco.

    For the reasons set forth in the preamble, it is proposed that 7 
CFR part 29 be amended as follows:

PART 29--TOBACCO INSPECTION

Subpart B--Regulations

    1. The authority citation for part 29, subpart B continues to read 
as follows:

    Authority: 7 U.S.C. 511m and 511r.

    2. A new Sec. 29.75b is added to read as follows:


Sec. 29.75  Display of baled flue-cured tobacco on auction warehouse 
floors in designated markets.

    Each lot of baled flue-cured tobacco displayed for sale on auction 
warehouse floors shall have a minimum of 30 inches from side to side 
between the rows with open side of the bale facing the aisles. Distance 
between lots of baled tobacco within the row shall be no less than 12 
inches between immediately adjacent lots.

Subpart C--Standards

    3. The authority citation for part 29, subpart C continues to read 
as follows:

    Authority: 7 U.S.C. 511b, 511m, and 511r.


Sec. 29.1059  [Amended]

    4. In Sec. 29.1059, the words ``and 29.)'' are removed and the 
words ``29, and 30.)'' are added in their place.
    5. Section 29.1109 is revised to read as follows:


Sec. 29.1109  Rule 3.

    In drawing an official sample from a hogshead or other package of 
tobacco, three or more breaks shall be made at such points and in such 
manner as the inspector or sampler may find necessary to determine the 
kinds of tobacco and the percentage of each kind contained in the lot. 
All breaks shall be made so that the tobacco contained in the center of 
the package is visible to the sampler, except for baled tobacco that is 
not opened for inspection (see Rule 30). Tobacco shall be drawn from at 
least three breaks from which a representative sample shall be 
selected. The sample shall include tobacco of each different group, 
quality, color, length, and kind found in the lot in proportion to the 
quantities of each contained in the lot.
    6. Section 29.1129 is revised to read as follows:


Sec. 29.1129  Rule 23.

    Tobacco shall be designated by the grademark ``No-G,'' when it is 
offtype, semicured, fire-killed, smoked, oxidized over 10 percent, has 
an odor foreign to the type, or is packed in bales which are

[[Page 25464]]

not approximately 42 inches wide  x  42 inches high  x  40 inches long 
.
    7. A new Sec. 29.1136 is added to read as follows:


Sec. 29.1136  Rule 30.

    Any lot of baled tobacco that is not opened for inspection but 
which otherwise meets the specifications of a grade shall be treated as 
a special factor grade by placing the special factor ``B'' after the 
grademark.
    8. In Sec. 29.1181, the undesignated text immediately following 
table ``1 Grade of Scrap'', is revised to read as follows:


Sec. 29.1181  Summary of standard grades.

* * * * *
    Special factors ``U'' (unsound), ``W'' (doubtful-keeping order), 
``S'' (strip), and ``M'' (mixed) may be applied to all grades. The 
special factors ``dirt'' or ``sand'' may be applied to any grade in the 
Primings group, including first quality Nondescript from the Primings 
group. The special factor ``B'' may be applied to all bales to denote 
tobacco not opened for inspection. Tobacco not covered by the standard 
grades is designated ``No-G,'' ``No-G-F,'' or ``No-G-Nested.''

Subpart G--Policy Statement and Regulations Governing Availability 
of Tobacco Inspection and Price Support Services to Flue-Cured 
Tobacco on Designated Markets

    9. The authority citation for part 29, subpart G continues to read 
as follows:

    Authority: Tobacco Inspection Act, 49 Stat. 731 (7 U.S.C. 511 et 
seq.); Commodity Credit Corporation Charter Act, 62 Stat. 1070, as 
amended (15 U.S.C. 714 et seq.); sec. 213, Pub. L. 98-180, 97 Stat. 
1149 (7 U.S.C. 1421); 49 Stat. 731 (7 U.S.C. 511 et seq.), unless 
otherwise noted.

    10. In Sec. 29.9406, paragraphs (c)(1), (c)(2), (c)(3), and (d) are 
revised to read as follows:


Sec. 29.9406  Failure of warehouse to comply with opening and selling 
schedule.

* * * * *
    (c) * * *
    (1) If the excess is 5,000 pounds or less of designated producer 
tobacco, the adjustment in producer sales opportunity shall be one 
pound for each pound of excess; sales in excess of 5,000 pounds shall 
be a violation of the sales schedule and the adjustment for the first 
violation shall be 5,000 pounds plus the larger of 3 pounds for each 
pound in excess of 5,000 pounds or 5,000 pounds; for the second 
violation, the adjustment shall be 5,000 pounds plus the larger of 5 
pounds for each pound in excess of 5,000 or 10,000 pounds; and for the 
third and subsequent violations, the adjustment shall be 5,000 pounds 
plus the larger of 5 pounds for each pound in excess of 5,000 pounds or 
50 percent of a schedule day's sales opportunity.
    (2) If the excess is 1,000 pounds or less of undesignated producer 
tobacco, the adjustment in producers sales opportunity is one pound for 
each pound of excess; if the excess is larger than 1,000 pounds, the 
adjustment is 1,000 pounds plus the larger of 3 pounds for each pound 
in excess of 1,000 or 2,000 pounds.
    (3) If the excess is designated producer tobacco that is not 
eligible for sales at the warehouse on the day of the sale, the 
adjustment in producers sales opportunity for the first violation is 
the larger of 3 pounds for each pound in excess or 5,000 pounds, and 
for the second and succeeding violations, the larger of 5 pounds for 
each pound in excess or 10,000 pounds.
    (d) If, on any sales day, a warehouse does not sell the full 
quantity of designated or undesignated tobacco authorized to be sold at 
such warehouse, the designated or undesignated sales opportunity at 
such warehouse on the next immediate sales day shall automatically be 
increased by the unsold quantity except that no such increase in sales 
opportunity shall exceed 5,000 pounds for designated tobacco or 500 
pounds for undesignated tobacco.

    Dated: May 6, 1999.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
[FR Doc. 99-11976 Filed 5-11-99; 8:45 am]
BILLING CODE 3410-02-P