[Federal Register Volume 67, Number 3 (Friday, January 4, 2002)]
[Rules and Regulations]
[Pages 481-484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-185]



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  Federal Register / Vol. 67, No. 3 / Friday, January 4, 2002 / Rules 
and Regulations  

[[Page 481]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AG51


Tobacco Marketing Quotas, Acreage Allotments and Production 
Adjustment

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Direct final rule.

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

SUMMARY: This rule will amend the Commodity Credit Corporation's 
tobacco marketing quota regulations at 7 CFR part 1464 to require 
burley tobacco producers to designate where they will sell their 
tobacco in order to qualify for price support and marketing cards. 
Currently only flue-cured tobacco producers, as a condition of price-
support, must designate where they will market their tobacco. This 
``Grower Designation Program'' is necessary because an increasing 
percentage of the burley tobacco being grown in the United States is 
being marketed directly to manufacturers or outside of traditional 
auction warehouses monitored by the Agency. These amendments will 
provide warehouse operators, the USDA, Agriculture Marketing Service 
(AMS) and others more complete and accurate information when planning 
for a tobacco auction marketing year.

DATES: This rule is effective February 4, 2002 without further action, 
unless adverse comment is received by January 22, 2002. If adverse 
comment is received, FSA will publish a timely withdrawal of the rule 
in the Federal Register. Comments concerning the information collection 
must be submitted by March 5, 2002.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to Director, Tobacco and 
Peanuts Division, FSA, USDA, 1400 Independence Avenue, SW, room 5750-S, 
STOP 0514, Washington, DC 20250-0514; Fax: (202) 690-2298. All comments 
will be made available for public inspection in the Office of the 
Director during regular business hours.

FOR FURTHER INFORMATION CONTACT: Misty Jones, Agricultural Program 
Specialist, Tobacco and Peanuts Division, United States Department of 
Agriculture (USDA), 1400 Independence Avenue, SW, STOP 0514, 
Washington, DC 20250-0514, telephone (202) 720-0200.

SUPPLEMENTARY INFORMATION:

Basis for Direct Final Rule

    The burley tobacco market location intention information is 
necessary to promote, foster, and maintain an orderly marketing of 
burley tobacco in a swiftly changing market environment. Historically, 
99 percent of all burley tobacco has been marketed at auction 
warehouses where the tobacco has been graded by AMS personnel where 
price-support has been offered.
    However, between the 2000 marketing season and the current, 2001 
marketing season, FSA predicts that as much as 80 percent of the 2001 
crop of burley tobacco will not be sold at auction warehouses, based on 
the amount of flue-cured tobacco (the second major cigarette-producing 
tobacco) that was sold in this manner in 2001.
    In the 2000 marketing year, only one major buying company offered 
direct contracts through a pilot program to burley tobacco producers. 
In late spring of 2001, it became known that all the major buying 
companies were intending to offer direct contracts to burley tobacco 
producers for the 2001 marketing year. In May 2001, FSA received 
designation numbers for flue-cured tobacco, which has had a designation 
program in place since 1974, that showed 79 percent of the crop would 
be sold through non-auction contracts and bypass the traditional 
auction market system; therefore, we believe a comparable percentage of 
burley tobacco will be sold non-auction.
    Without the collection of designation information for burley 
tobacco, FSA will not know where the tobacco will be sold or how many 
pounds will be sold outside the traditional auction market system. 
Warehouse operators who, in the past, have handled almost all of any 
year's crop, will not have the information needed to keep their 
businesses open, and AMS will not know how to schedule the grading of 
burley tobacco. Farmers who wish to remain with the auction system will 
need to know which warehouses will still be open for auction marketing 
of their tobacco.
    Currently, AMS policy bases sales time for burley warehouses on the 
previous 3 years volume of sales at individual warehouses. Due to the 
increase in direct contracting for 2001, AMS needs to know how this 
will change the volume of tobacco that will be available at the various 
warehouses.
    Because of the recent high volume of direct contract purchases, the 
current manner of determining sales time no longer appears to be 
feasible. Thus, it is necessary to collect marketing intention 
information on burley tobacco farms. This is not a major departure from 
past policy since marketing-intention information has been collected on 
flue-cured tobacco farms for over twenty years. USDA is concerned that 
large quantities of ``direct sales'' could be disruptive to the orderly 
process of marketing burley tobacco. The ``Grower Designation Program'' 
will sustain orderly marketing of the 2001 burley tobacco crop. The 
Grower Designation Program'' will track market volumes and thereby 
enable AMS to adjust its workforce and provide information to warehouse 
operators, receiving station officials and dealers for the 2001 
marketing season.
    This rule contains no controversial provisions and based on 
discussions with tobacco producers and industry representatives FSA 
anticipates no adverse comments. Accordingly, this rule will be 
effective as a final rule 30 days after filing for public inspection 
with the Office of the Federal Register unless there are adverse 
comments. If adverse comments are received, this rule will be withdrawn 
and will not become effective. In that case, this program will be 
implemented with a proposed and final rule. To expedite rulemaking in 
case this direct final rule is withdrawn, a separate proposed rule is 
being published in this issue of the Federal Register and will become 
the operative document for a regular final rule. Adverse comments 
received for this direct final rule will be considered

[[Page 482]]

with the comments received in response to the proposed rule.

Executive Order 12866

    This rule is issued in conformance with Executive Order 12866, has 
been determined to be significant, and was reviewed by OMB.

Regulatory Flexibility Act

    FSA certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. The basis for this is 
that, through its extensive contacts with burley tobacco growers and 
warehouses, FSA found no significant objections to this action.

Federal Assistance Programs

    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--10.0514.

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 an 
Environmental Impact Statement is needed.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require 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).

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
established requirements for Federal agencies to assess the effects of 
their regulatory actions on state, local, and tribal governments or the 
private sector. This rule contains no Federal mandates, as defined in 
Title II of the UMRA, for State, local and tribal governments or the 
private sector. Therefore, this rule is not subject to the requirements 
of sections 202 and 205 of UMRA.

Paperwork Reduction Act

    FSA has received emergency approval of the information collections 
associated with this rule. It has been assigned OMB Control Number 
0560-0217. The Agency intends to publish a notice requesting comments 
on these collections and will submit a regular request for approval to 
OMB.

Background

    Currently, AMS, working with local trade boards or with tobacco 
warehouse associations, schedules the days on which auction sales are 
to take place at designated auction markets, equitably distributing 
sales opportunity among the warehouses based on floor space, 
performance, or both.
    Because of the recent high volume of direct contract purchases, the 
current manner of determining sales time no longer appears to be 
feasible. It is necessary to collect marketing-intention information on 
burley tobacco in the same manner that marketing-intention information 
has been collected on flue-cured tobacco since 1974. Therefore, in 
order to implement a successful burley tobacco designation program, 
producers were allowed to designate pounds to specific warehouses 
beginning June 1, 2001, as recommended by the Burley Tobacco Advisory 
Committee (Committee).
    The 39-member Committee was established by the Secretary in 1990 to 
provide information essential to the orderly marketing of burley 
tobacco. At a meeting in June 2000, the Committee passed a motion that 
would affect the method of determining the number of days on which 
auction sales would be allowed to take place at each tobacco auction 
warehouse. The Committee's motion, to establish a Grower Designation 
Program for burley tobacco similar to the long standing Flue-cured 
Tobacco Warehouse Designation Program followed an announcement in early 
2000 by a major cigarette manufacturer that it would contract with 
burley tobacco growers to buy tobacco directly from them at central 
buying points known as receiving stations, essentially acting as a 
dealer and bypassing the traditional auction market system.
    The Flue-cured Tobacco Warehouse Designation Program requires that 
each flue-cured farm operator designate the warehouse(s) to which that 
farm's tobacco will be presented for sale and the number of pounds of 
tobacco that will be marketed at each designated location. Such 
designations provide information vital to the equitable scheduling 
among warehouses of the day(s) on which each location can hold an 
auction sale and the number of pounds that can be sold on each of those 
scheduled days. This information also allows AMS to schedule personnel 
to grade such tobacco when it is presented for sale. Designation is a 
condition of price support eligibility for flue-cured tobacco growers.
    For the 2000 marketing year FSA had no advance information 
regarding the volume of burley tobacco that individual burley growers 
had placed under private contract with the buying company because such 
information was contained in individual and private contracts between 
grower and company. Thus, FSA did not know how much tobacco would 
bypass the traditional auction warehouse market system.
    The buying company announced early in 2001 that it would 
dramatically expand its direct purchase program. It would contract to 
purchase both burley and flue-cured tobacco rather than just burley; 
and it would purchase these kinds of tobacco from receiving stations in 
Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee 
and Virginia rather than just Kentucky and Tennessee.
    Seven other leaf-buying companies followed this announcement with 
announcements of their own. They, too, would contract with individual 
burley and flue-cured tobacco growers to buy their crops direct. 
Currently, there are eight companies with stated intentions of buying 
both burley and flue-cured tobacco at 72 established receiving stations 
in seven states.
    On May 7, 2001, following the close of the flue-cured initial 
designation period, FSA received a report that predicted a need for a 
major information collection effort regarding burley tobacco: seventy-
nine percent of the 2001 flue-cured tobacco available for sale has been 
designated to receiving stations.
    FSA judges that a comparable percentage of burley will be sold 
during 2001 at receiving stations. However, with no designation program 
in place there is no way to collect the information that is vital to 
the industry, to the warehouses where burley tobacco has historically 
been marketed, and to USDA. In particular, AMS will be immediately 
adversely impacted by the lack of such data. From the historic 1 
percent of sales that occurred outside the auction market system, much 
of the 2001 burley tobacco crop is likely to be sold in this manner. 
This is a sudden change in only one market season. FSA discerned the 
breadth of this change after the designation figures were collected 
from 2001 crop flue-cured growers and determined that this rule was 
immediately necessary for burley.
    All eligible burley tobacco growers may avail themselves of the 
auction market system. However, only the growers/sellers and buyers 
involved in non-auction sale and purchase transactions know the amount 
of tobacco that will be involved in these

[[Page 483]]

private transactions. Without a burley designation program in place 
neither the buying companies, AMS, nor the warehouses will have any 
information concerning how much tobacco will be available for sale by 
auction because they will not have information about what tobacco won't 
be available for sale by auction.
    USDA is concerned with the effects that large quantities of direct 
sales could have on the orderly process of marketing burley tobacco. 
The burley tobacco Grower Designation Program will track market volumes 
and thereby enable AMS to target its workforce.
    FSA began collecting data through burley designations from growers 
voluntarily on June 1, 2001 in order to have data for planning the 
warehouse system needs prior to September 1, 2001. Although burley 
farmers may wait until the effective date of this rule to submit their 
information, they are encouraged to report now to facilitate the 
marketing of their crops. They may make changes during scheduled 
redesignation periods.

List of Subjects in 7 CFR Part 1464

    Imports, Tobacco.


    Accordingly, 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; 1445-2; 15 
U.S.C. 714b, 714c; Pub. L. 106-78, Pub. L. 106-113, Stat. 1135 and 
Pub. L. 106-224.


    2. Revise Sec. 1464.2 (b)(2) introductory text, (b)(2)(ii), 
(b)(2)(iii), (b)(2)(iv), (b)(2)(v) and (b)(2)(vii) to read as follows:


Sec. 1464.2  Availability of price support.

* * * * *
    (b) * * *
    (2) Special requirements for flue-cured and burley tobacco. Price 
support will be available only on flue-cured and burley tobacco that 
has been designated for sale at specific warehouses by the producer 
under the following conditions:
* * * * *
    (ii) Producer designation of warehouses. Producers will be 
required, as a condition of price support, to designate the warehouses 
at which they will market their tobacco.
    (A) For flue-cured tobacco such designations may be at any 
warehouse or warehouses in any market within a radius of 100 miles from 
the county seat of the county in which the farm is located, or if such 
farm is physically within two counties, then from the county seat of 
the county in which the county FSA office administering that farm is 
located. To the extent there are less than eight markets within such 
radius, any warehouse or warehouses in any of the eight markets nearest 
to the county seat may be designated. A producer may obtain price 
support only in a warehouse which the producer has designated, and at 
each such warehouse only with respect to the quantity of tobacco 
designated for sale at such warehouse.
    (B) For burley tobacco such designations may be at any warehouse or 
warehouses in any burley market.
    (iii) When producer designations shall be made. Producers must 
designate the warehouse(s) at which they will market their tobacco 
during a period that shall be announced beforehand by the local county 
FSA office. Unless extended by the Deputy Administrator, the period for 
making designations shall be before May 31 each year for flue-cured 
tobacco and August 31 each year for burley tobacco. Producers who lease 
quota or whose farm is reconstituted (the combining or dividing of a 
farm due to a change in operation) after such period may designate the 
warehouse(s) at which their tobacco will be marketed according to 
procedures to be established by the Deputy Administrator, Farm 
Programs, FSA. Producers who have designated warehouses that cease to 
operate or cease to have tobacco inspection or price support available 
may change their designations at any time after such occurrences. 
Producers who have designated warehouses whose inspection services have 
been temporarily suspended for any reason for the equivalent of at 
least one sales day may change their designation at any time after such 
occurrences. Redesignation (changes in warehouse(s) designated or in 
pounds designated to a warehouse) or designations for farms that have 
not previously designated tobacco may be made by producers during the 
five business days ending on the first Friday of each month during the 
flue-cured or burley, as applicable, tobacco marketing season. Such 
redesignation or initial designation shall be made on any one day of 
each redesignation period. Such redesignation or initial designation 
shall be effective on the second Monday following the Friday on which 
the redesignation period ends.
    (iv) Form and content of designations. For flue-cured tobacco a 
designation shall be made for each warehouse at which a producer 
desires to market tobacco by executing a form provided by the county 
FSA office. The producer will be required to indicate on such form the 
name of the warehouse or warehouses designated by the producer and the 
pounds of flue-cured tobacco the producer desires to sell at such 
warehouse as well as any other information required to be stated on 
such form. For burley tobacco a designation shall be made for each 
warehouse, receiving station or dealer at which a producer desires to 
market tobacco by executing a form provided by the county FSA office. 
The producer will be required to indicate on such form the name of the 
warehouse(s), receiving station(s) or dealer(s) designated by the 
producer and the pounds of burley tobacco the producer desires to sell 
at such warehouse, receiving station or dealer as well as any other 
information required to be stated on such form.
    (v) Entering designation information. For flue-cured tobacco, the 
warehouse code number of the warehouse the producer has designated will 
be indicated on the farm marketing card. For burley tobacco, the 
warehouse, receiving station, or dealer code number of the warehouse, 
receiving station or dealer the producer has designated will be 
indicated on the farm marketing card. If an effective date is 
determined in accordance with paragraph (b)(2)(iii) of this section, 
such effective date will be shown on the farm marketing card. For flue-
cured tobacco, if the producer has not designated a warehouse, a 
warehouse code will not be shown on the marketing card. Changes in 
designation by the producer shall be accomplished by the producer 
returning the marketing card to the county FSA office and requesting 
the transfer of any unmarketed pounds of flue-cured or burley tobacco 
shown on any marketing card to another eligible warehouse, receiving 
station or dealer, if applicable.
* * * * *
    (vii) Availability of designation information. Each county FSA 
office shall send designations received to the Flue-Cured Tobacco 
Cooperative Stabilization Corporation, Raleigh, North Carolina for 
flue-cured tobacco, Burley Tobacco Growers Cooperative Association, 
Lexington, Kentucky and Burley Stabilization Corporation, Knoxville, 
Tennessee for burley tobacco, following each designation period and 
each period for changing designations. That association(s) shall inform 
the Flue-Cured Tobacco Advisory Committee or the Burley Tobacco 
Advisory Committee, as applicable, of the pounds designated to each

[[Page 484]]

warehouse and the pounds of any undesignated or non-auction tobacco 
that, for the purpose of recommending opening dates and selling 
schedules in accordance with part 29 of this title, is available for 
apportioning for sale at each warehouse. That association also shall 
furnish each warehouse the name and address of the producers who 
designated the warehouse, the pounds each designated and the pounds 
that represent 103 percent of the marketing quota of each such 
producer. The Director, Tobacco and Peanuts Division, shall furnish 
each receiving station the name and address of the producers who 
designated the receiving station, the pounds each designated and the 
pounds that represent 103 percent of the marketing quota of each such 
producer.
* * * * *

    3. Revise Sec. 1464.7(d) to read as follows:


Sec. 1464.7  Eligible producer.

* * * * *
    (d) In addition to meeting all other requirements that apply 
elsewhere, including (but not limited to) the warehouse designation 
provisions of Sec. 1464.2, must not be ineligible, in accordance with 
part 1400 of this title, to receive price support payments, loans and 
benefits.
* * * * *

    4. Revise Sec. 1464.10(i)(1)(i), (i)(2) and (i)(3)(i) to read as 
follows:


Sec. 1464.10  No-net-cost tobacco fund or account.

* * * * *
    (i) * * *
    (1) * * *
    (i) From any dealer, receiving station official or warehouse 
operator who acquired the tobacco involved from the producer; or
* * * * *
    (2) A dealer, receiving station official or warehouse operator may 
deduct the amount of any producer contribution or assessment from the 
price paid to the producer for such tobacco.
    (3) * * *
    (i) From the dealer, receiving station official or warehouse 
operator who acquired the tobacco involved from the producer; or
* * * * *

    Signed at Washington, DC, on December 21, 2001.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 02-185 Filed 1-3-02; 8:45 am]
BILLING CODE 3410-05-P