[Federal Register Volume 68, Number 8 (Monday, January 13, 2003)]
[Proposed Rules]
[Pages 1556-1566]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-368]


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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. 68, No. 8 / Monday, January 13, 2003 / 
Proposed Rules  

[[Page 1556]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

Commodity Credit Corporation

7 CFR Part 1464

RIN: 0560-AG52


Tobacco Marketing Cards, Penalties, Identification of Marketings 
and Recordkeeping and Reporting Requirements

AGENCY: Farm Service Agency and Commodity Credit Corporation, USDA.

ACTION: Proposed rule; request for public comment.

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

SUMMARY: The Farm Service Agency (FSA) and Commodity Credit Corporation 
(CCC) propose to amend regulations in order to provide for a system to 
electronically report non-auction purchases of burley and flue-cured 
tobacco at common delivery points known as receiving stations, and for 
the registration of these receiving stations. These changes are 
necessary because, with most burley and flue-cured tobacco currently 
being sold through private contract arrangements rather than the 
traditional auction system, meeting the current reporting 
requirements--manual reports on paper--would be extremely burdensome to 
the buyers of the tobacco. Also, an electronic reporting system will 
provide FSA with a nearly error-free method of tracking producer sales, 
because human error will be virtually eliminated. The proposed 
electronic reporting will permit the quick recording of large 
quantities of tobacco purchased and the equally quick reporting of 
these purchases to FSA for purposes of monitoring the flow of marketed 
tobacco. This proposed reporting system is voluntary and therefore any 
buyer who might find the system burdensome may comply with the record 
keeping and reporting requirements which are currently in place.

DATES: Submit comments about this proposed rule on or before February 
12, 2003. Submit comments about the information collection (the 
paperwork burden) on or before March 14, 2003.

ADDRESSES: Mail or hand deliver public comments about the proposed rule 
or about the information collection to Director, Tobacco Division, FSA, 
USDA, 1400 Independence Avenue, SW., Room 5750-S, STOP 0514, 
Washington, DC 20250-0514. Comments may be sent by facsimile to (202) 
720-0549. Comments may be sent by e-mail to: [email protected].

FOR FURTHER INFORMATION CONTACT: Ann Wortham, Tobacco Division, (202) 
720-2715.

SUPPLEMENTARY INFORMATION: 

Executive Order 12372

    This proposed rule 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 12866

    This rule has been determined to be significant for the purposes of 
Executive Order 12866 and therefore has been reviewed by the Office of 
Management and Budget (OMB). A summary of the cost benefit assessment 
is included in the Background section explaining the actions this rule 
will take.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule because USDA is not required by 5 
U.S.C. 553 or any other provision of law to publish a notice of 
proposed rulemaking with respect to the subject matter of this rule.

Unfunded Mandates

    This rule contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (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 the UMRA.

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: 10.051--Commodity Loans and Loan Deficiency Payments.

Environmental Evaluation

    FSA has determined that this action does not constitute a major 
Federal action significantly affecting the quality of the human 
environment, and in accordance with the National Environmental Policy 
Act of 1969 (42 U.S.C. 4321 et seq.), neither an Environmental Impact 
Statement nor an environmental assessment is required.

Paperwork Reduction Act

    Title: 7 CFR 723--Tobacco; 7 CFR 1464--Tobacco.
    OMB Control Number: 0560-0182.
    Type of Request: Request for approval of a revised information 
collection and for approval of new information collection activities.
    Abstract: USDA will collect information from eligible tobacco 
producers by ballot referenda in order to determine such issues as 
whether marketing quotas will be in effect for certain kinds of tobacco 
or whether producers in certain states will be allowed to lease their 
tobacco quota across county lines. Such referenda, secured voluntarily 
from eligible voters, provide, for instance, for the continuation of a 
marketing quota system and thereby a price support program. Referenda 
are conducted by the Secretary of Agriculture (the Secretary) in 
accordance with the Agricultural Adjustment Act of 1938 as amended 
(1938 Act). The 1938 Act requires:
    [sbull] A referendum of the farmers who were engaged in the 
production of the crop of tobacco immediately prior to the referendum 
in order to determine whether these farmers are in favor of, or opposed 
to, national marketing quotas for the upcoming 3 marketing years, 
section 312;
    [sbull] A referendum of active flue-cured tobacco producers to 
determine whether they favor or oppose permitting the sale of flue-
cured tobacco allotment or quota within their respective States, 
section 316; and
    [sbull] A referendum which would permit the Secretary to allow for 
the lease and

[[Page 1557]]

transfer of burley tobacco across county lines within certain States, 
section 319.
    Likewise, USDA will collect such information in the form of reports 
and record-keeping requirements which are necessary to meet the 
provisions of the 1938 Act which require that the tobacco marketing 
quota program resists both an excessive supply and the disorderly 
marketing of tobacco. The purchase information to be collected from 
receiving stations is to be used to maintain an orderly flow of tobacco 
by providing a reconcilable audit trail of tobacco allotted, grown, and 
then sold.
    The information to be collected from receiving stations is the same 
information that dealers, purchasing tobacco directly from farmers 
outside the auction warehouse venue, are required to submit according 
to current regulations. Certain reporting modifications are proposed, 
however, in order to enable receiving stations to capture and transmit 
tobacco marketing information required by USDA using computer 
technology. Marketing data collected from receiving station purchases 
combined with that of dealer purchases and of auction market sales, 
provides a view of tobacco production throughout the nation. These 
total figures are available to Congress, and the USDA, Office of 
Inspector General (OIG), and National Agricultural Statistical Service 
(NASS).
    Any new information collection requirements that result from this 
rule will be submitted to OMB for approval under the Paperwork 
Reduction Act (44 U.S.C. 3507 et seq).
    Estimate of Respondent Burden: The estimated average public 
reporting burden for the collection of information is as follows:
    Respondents: Eligible Tobacco Farmers voting in a referendum and 
receiving station officials.
    Estimated Number of Respondents: 239,535.
    Estimated Annual Number of Responses: 246,087.
    Estimated Total Annual Burden Hours on Respondents: 22,133.
    In addition to commenting on the substance of the regulation, the 
public is invited to comment on the information collection. Proposed 
topics include the following: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information technology; or (d) ways to 
minimize the burden of the information collection on those who are to 
respond. The information collection package may be obtained from the 
Tobacco Division, at the address listed below. Comments regarding the 
information collections may be sent to the Desk Officer for 
Agriculture, Office of Information and Regulator Affairs, OMB, 
Washington, DC 20503; and to Tobacco Division, FSA, USDA, STOP 0514, 
1400 Independence Avenue, SW., Washington, DC 20250-0514.

Public Participation

    Interested persons are invited to participate in this proposed rule 
making by submitting written data, views, or arguments. Comments 
relating to the economic effects that might result from adoption of the 
proposals in this rule are also invited. All comments received on or 
before the closing date for comments will be considered before action 
is taken on this proposed rule. The proposals contained in this rule 
may be changed in light of comments received from the public. All 
comments should reference the Regulation Identifier Number (RIN) and 
the date and page number of this issue of the Federal Register. 
Comments will be made available for public inspection in the Office of 
the Director during regular business hours.

Background

    The Agricultural Adjustment Act of 1938 (the 1938 Act) requires 
farmers growing burley and flue-cured tobacco, in states in which 
marketing quotas for those kinds of tobacco are in effect, to have a 
marketing allotment, or quota, system. Annually, the Secretary 
determines and announces the amount of these kinds of tobacco which may 
be marketed during the marketing year. The total marketing quota for 
burley and flue-cured tobaccos for 2001 were 880,900,000 pounds 
(548,900,000 flue-cured and 332,000,000 burley). These national quotas 
are then apportioned among the States for allocation to the farms on 
which the quota is produced, thus establishing individual farm 
marketing quotas. Further, the Secretary requires collection of 
penalties upon those pounds of tobacco marketed from any farm in excess 
of that farm's marketing quota. In order to monitor tobacco marketing, 
certain procedures have been established to collect the following 
information for each marketing year:
    [sbull] The amount of tobacco allotted to each farm for sale; and 
the amount of tobacco actually sold from each farm. The primary methods 
of collecting and verifying this data are:
    [sbull] A marketing card issued for each farm which carries on the 
reverse side the total number of pounds of tobacco which may be sold 
from that farm without incurring a penalty; and
    [sbull] A separate sale bill for each market transaction itemizing 
the number of pounds purchased.
    There are two ways to buy tobacco:
    [sbull] A buyer goes to a tobacco auction warehouse and 
competitively bids for displayed tobacco; or
    [sbull] A buyer goes to a tobacco farm and buys directly from the 
grower.
    At each of these market venues, notations are made on the marketing 
card to reflect the amount of tobacco sold or purchased in the 
transaction, and a sale bill is prepared. At the close of the market 
season, a reconciliation is done for each farm: the totals on a farm's 
marketing card are compared to the totals of a farm's sale bills.
    At an auction warehouse, a tobacco grower presents a stiff, 
embossed, plastic marketing card which is put into a machine that is 
provided and serviced by FSA (similar to those used in early credit 
card days) which imprints farm-specific information necessary to track 
tobacco marketings directly onto each sales bill. However, a buyer who 
purchases directly from a grower does not have access to the imprint 
machine and must complete all farm-specific information by hand. 
Historically, 97% of tobacco has been sold at auction; and 3% purchased 
directly from the growers. The 2001 marketing year almost reversed 
these proportions and thus put an extreme reporting burden on those who 
purchase directly from the growers.

The Current Reporting Rule

    This rule proposes to reduce the burden by allowing reports to be 
submitted electronically. Current rules do not provide for electronic 
reporting. Customers who buy large quantities of tobacco at receiving 
stations may submit farm-specific marketing information electronically 
under this rule. A marketing card with a thermal imprinted bar code 
will be provided to growers who will deliver tobacco to receiving 
station(s). The bar code will provide the same farm-specific 
information necessary to track tobacco marketings that is currently 
included in the traditional embossed card. These proposed changes will 
allow each buyer to develop a tobacco purchasing practice tailored to 
its needs while allowing FSA to track marketed quota. Further, FSA will 
benefit by obtaining market information within 48 hours, rather than 
weeks after the close of a market season as is the case with the old

[[Page 1558]]

paper based system. Also, it will reduce the amount of human error 
inherent in manually entering data. Thus, electronic reporting of 
tobacco sales will provide a more effective method of monitoring quota 
and greatly reduce the likelihood of fraud.

Economic Evaluation

    Electronic reporting is expected to save approximately $500,000 
annually by eliminating manual processing of reports and the related 
printing, delivery, handling, and storage expenses. In addition, 
personnel at the receiving stations may save as much as 20,000 hours of 
labor annually by not having to manually report each purchase. Thus, 
this proposed rule will cost buyers substantially less than complying 
with current requirements for manually reporting tobacco purchases.

Conclusion

    Reports from receiving stations will be maintained separately from 
those of ``auction warehouses'' and ``dealers,'' in addition to the 
reporting being done electronically. The proposed reporting changes 
will benefit both the buyer and FSA:
    [sbull] Buyers will not have to maintain both a manual and an 
electronic accounting of the purchase; and
    [sbull] FSA will receive more timely reports of tobacco marketings 
and not have to manually input sales information.

The Proposed Rule

    For the reasons stated in the preamble, the Farm Service Agency 
proposes to amend Part 723 and Part 1464 of the Regulations of the 
Department of Agriculture as follows:

PART 723--TOBACCO

    1. The authority citation for 7 CFR Part 723 will continue to read 
as follows:

    Authority: 7 U.S.C. 1301-1314, 1314-1, 1314b, 1314b-1, 1314b-2, 
1314c, 1314d, 1314e, 1314f, 1314i, 1315, 1316, 1362, 1363, 1372-75, 
1421, 1445-1, and 1445-2.

    2. Amend Sec.  723.104 by adding the following terms to paragraph 
(b) in the proper alphabetical order:


Sec.  723.104  Definitions.

* * * * *
    Contract Purchase. A non-auction purchase of tobacco between a 
buying tobacco company and a producer, who have previously entered into 
a contract describing conditions of the purchase.
    Contract Tobacco. Non-auction tobacco purchased by a tobacco buying 
company from a producer in accordance with a contract describing 
conditions of the purchase.
* * * * *
    Floor Scrap. Scrap or leaves of tobacco that accumulate on a 
receiving station floor before purchase during the regular course of 
business.
* * * * *
    Purchase Date. Date on which the gross amount of the purchase price 
of first marketing of tobacco is determined.
    Purchase Day. Calendar day the tobacco was marketed at a receiving 
station.
* * * * *
    Receiving Station. A buying company-designated place where 
producers market tobacco under contract with the buying company.
    Receiving Station Agent. A representative of the receiving station.
    Receiving Station Gross Pounds Purchased. Sum of the weight of all 
purchased producer tobacco on a receiving station floor.
    Receiving Station Official. A buying company designee at the 
receiving station with legal authority to obligate the buying company 
and who will be a point of contact concerning the day-to-day operations 
of the receiving station.
* * * * *
    Staging area. An area within the receiving station in which 
producer tobacco is unloaded and prepared to be marketed.
    3. In Sec.  723.305 revise paragraph (a)(1) introductory text to 
read as follows and remove paragraph (e)(4):


Sec.  723.305  Issuance of marketing cards.

    (a) * * *
    (1) A marketing card (MQ-76, MQ-76-C, or MQ-77) shall be issued for 
the current marketing year for each farm having quota tobacco available 
for marketing. Cards shall be issued in the name of the farm operator 
except that:
* * * * *
    4. In Sec.  723.309 revise paragraphs (b) and (c), and add 
paragraph (d) to read as follows:


Sec.  723.309  Persons to pay penalty.

* * * * *
    (b) Receiving station purchase. The penalty due on marketings by a 
producer through a receiving station purchase shall be paid by the 
receiving station official, who may deduct an amount equivalent to the 
penalty from the price paid to the producer.
    (c) Non-auction sale. The penalty due on tobacco acquired directly 
from a producer or dealer, other than at an auction sale or receiving 
station purchase, shall be paid by the person acquiring the tobacco, 
who may deduct an amount equivalent to the penalty from the price paid 
to the producer or dealer in the case of a sale.
    (d) Marketing outside the United States. The penalty due on 
marketings by a producer or dealer directly to any person outside the 
United States shall be paid by the producer or dealer making the sale.
    5. In Sec.  723.310 revise paragraphs (a) and (c) to read as 
follows:


Sec.  723.310  Date penalty is due.

    (a) Payment of penalty. Penalties shall become due at the time the 
tobacco is marketed, except that in the case of false identification or 
failure to account for disposition, the penalty shall be due on the 
date of such false identification or failure to account for 
disposition. The penalty shall be paid by remitting the amount due to 
the State FSA office not later than the end of the calendar week in 
which the tobacco becomes subject to penalty. A draft, money order, or 
check drawn payable to the Farm Service Agency may be used to pay any 
penalty, but any such draft, money order, or check shall be received 
subject to payment at par.
* * * * *
    (c) Receiving station purchases or non-auction sales. Receiving 
station purchases or non-auction sales of excess tobacco shall be 
subject to the full rate of penalty, and such shall be paid in full 
even though the penalty may exceed the proceeds for the sale of 
tobacco.
    6. In Sec.  723.311 revise paragraphs (b)(3), (d)(2), (d)(2)(i), 
and (e) and add paragraph (b)(4) to read as follows:


Sec.  723.311  Lien for penalty; liability of persons who are 
affiliated with indebted person or who permit the indebted person to 
use their identification card.

* * * * *
    (b) * * *
    (3) In the case of an indebted dealer, the debt is entered on the 
debt record of the State FSA office for the State in which the dealer 
is required to file reports; and
    (4) In the case of an indebted receiving station official, the debt 
is entered on the debt record of the State FSA office for the State in 
which the receiving station is located.
* * * * *
    (d)(1) * * *
    (2) A dealer, warehouse operator or receiving station official who 
permits an indebted person to use such dealer's or warehouse operator's 
identification card or receiving station official's identification 
number to market tobacco shall be liable for the amounts due by the 
indebted person to the United States

[[Page 1559]]

under this part up to the amount of the value of the tobacco so 
marketed. In addition, unless the Deputy Administrator determines 
otherwise, any persons or person, who as a warehouse operator, dealer, 
or receiving station official becomes affiliated with any person who at 
the time of affiliation is indebted under this part to the United 
States, shall be liable for the amount of the debt owed to the United 
States by the person with whom such person or persons become affiliated 
up to the amount of the value of any tobacco which is marketed by such 
affiliated warehouse operator, dealer, or receiving station official 
during the time of the affiliation with the indebted person. 
Affiliation may include any relationship in which the parties have a 
common interest in tobacco, or in an enterprise or entity involved in 
the marketing, processing, or handling of tobacco, or where the parties 
both hold a position of responsibility or ownership in such an 
enterprise or entity, or where there is common ownership of a business 
involved in the transaction, as determined by the Deputy Administrator. 
A warehouse operator, dealer, or receiving station official may also be 
considered to be affiliated with an indebted person when such warehouse 
operator, dealer, or receiving station official is associated with a 
person who is both:
    (i) An employee or otherwise authorized to buy and sell tobacco for 
such warehouse operator, dealer, or receiving station official; and
    (ii) * * *
    (e) TMQ lien notation. Upon notification that a TMQ lien has been 
established, the producer marketing card (MQ-76 or MQ-76-C) or dealer 
identification card (MQ-79-2) shall be returned immediately to the 
issuing office for recording the TMQ lien. Failure to immediately 
return the applicable card will result in FSA notifying all registered 
warehouse operators, dealers, and receiving station officials of the 
TMQ lien information and of their responsibilities for collecting the 
TMQ lien. The card shall be promptly returned to the producer or dealer 
after it is annotated with the TMQ lien.
* * * * *
    7. In Sec.  723.313 revise paragraphs (a)(1) introductory text, 
(a)(2), (a)(3), (b), (e), and (f) to read as follows:


Sec.  723.313  Identification of marketings.

    (a) * * *
    (1) Identification of producer marketings. Each auction and non-
auction marketing of burley or flue-cured tobacco shall be identified 
by a valid marketing card, Form MQ-76 or MQ-76-C, issued for the farm. 
The reverse side of the marketing card shall show in pounds:
* * * * *
    (2) Cross-references of tobacco sale bill number to prior sale 
bill. Each warehouse operator and receiving station official, for each 
lot of tobacco weighed in on the warehouse floor or receiving station 
floor for sale the same day, shall cross-reference the tobacco sale 
bill to each prior tobacco sale bill for tobacco identified by the same 
marketing card. To accomplish the cross-reference, each other tobacco 
sale bill number shall be entered by the warehouse operator or 
receiving station official in the ``Remarks'' space on the tobacco sale 
bill, on all copies, at the time such tobacco is weighed at the 
warehouse.
    (3) Recording producer sale. Each producer sale at auction shall be 
recorded on Form MQ-72-1, Report of Tobacco Auction Sale, and each 
producer sale at a non-auction receiving station shall be 
electronically recorded in a format and transmitted according to 
standards issued by the Deputy Administrator. Receiving station 
officials may request approval from the Deputy Administrator to 
manually record on Form MQ-72-C, Report of Receiving Station Purchase, 
for producer sales. Dealer purchases shall be executed on Form MQ-72-2 
and the data shall be entered on Form MQ-76-C. For producer sales at 
auction, Form MQ-72-1 and Form MQ-76 shall be executed only by the FSA 
marketing recorder. For producer sales at a receiving station, Form MQ-
72-C and Form MQ-76-C shall be executed only by the FSA marketing 
recorder.
    (4) * * *
    (b) Dark air-cured, fire-cured, or Virginia sun-cured tobacco. With 
respect to dark air-cured, fire-cured, or Virginia sun-cured tobacco:
    (1) Identification of producer marketings. Each marketing of such 
kind of tobacco from a farm shall be identified by a valid marketing 
card issued for the farm for the respective kind of a tobacco, either 
an MQ-76, MQ-76-C or MQ-77 (including sale memo). With respect to each 
non-auction sale from:
    (i) A within quota farm a check mark shall be entered on the inside 
of MQ-76, and
    (ii) An excess farm for which an MQ-77 is issued, an executed bill 
of nonauction sale shall be prepared, and such bill of nonauction sale 
shall be delivered to a marketing recorder or other person who is 
authorized to issue sale memos.
    (2) Other persons authorized to execute MQ-76, MQ-76-C or MQ-77 
(including sale memo).
    (i) A warehouse operator who has been authorized during the current 
marketing year on MQ-78, Tobacco Warehouse Organization, may record a 
sale on MQ-76 or MQ-77 (including the issuance of a sale memo) to 
identify a sale for a farm if a marketing recorder is not available at 
the warehouse when the marketing card is presented.
    (ii) A receiving station official who has been so authorized by the 
Deputy Administrator during the current marketing year may record a 
sale on MQ-76-C (including the issuance of a sale memo) to identify a 
sale for a farm if a marketing recorder is not available at the 
receiving station when the marketing card is presented.
    (iii) Any warehouse operator, receiving station official or dealer, 
who engages in the business of acquiring scrap tobacco from farmers, 
and who has been authorized on MQ-78 or MQ-78-C, may for each purchase 
of scrap tobacco execute an MQ-76, MQ-76-C or MQ-77 (including a sale 
memo if the bill of non-auction sale has been executed).
    (3) Verification of sales processed during the absence of marketing 
recorder. Any person authorized on MQ-78 or MQ-78-C by the Deputy 
Administrator to act as a marketing recorder shall promptly present to 
a marketing recorder for verification each warehouse bill (floor sheet) 
or receiving station sales bill processed and identified by an MQ-76, 
MQ-76-C, or MQ-77 (including any sale memos) executed in the absence of 
a marketing recorder.
    (4) Authorization to act as marketing recorder. The authorization 
on MQ-78 or MQ-78-C for persons may be granted by the Deputy 
Administrator or may be withdrawn by the Deputy Administrator if such 
action is determined to be necessary to properly enforce the 
regulations in this part.
    (e) Verification of penalties by warehouse operators, receiving 
station officials, or dealers. Each sale of tobacco by a producer which 
is subject to penalty and which has been recorded by a marketing 
recorder shall be verified by a warehouse operator, receiving station 
official, or dealer to determine whether the amount of the penalty 
shown to be due has been correctly computed. Such warehouse operator or 
receiving station official shall not be relieved of any liability for 
the amount of penalty due because of any error which may occur in 
computing the penalty and recording the sale.

[[Page 1560]]

    (f) Check register. The serial number of the tobacco sale bill(s) 
shall be recorded by the warehouse operator or receiving station 
official on the check register or check stub for the check written 
covering the sale of tobacco by a producer.
* * * * *
    8. In Sec.  723.401 revise the section title, re-designate 
paragraphs (b) through (e) as paragraphs (c) through (f), and add a new 
paragraph (b) to read as follows:


Sec.  723.401  Registration of burley and flue-cured tobacco warehouse 
operators, receiving station officials and dealers.

* * * * *
    (b) Receiving station registration. For burley and flue-cured 
tobacco, any receiving station official purchasing either flue-cured or 
burley tobacco shall be registered with the U.S. Department of 
Agriculture, and such registration shall be filed with the Director, 
Tobacco and Peanuts Division.
* * * * *
    9. Revise Sec.  723.402 to read as follows:


Sec.  723.402  Warehouse or receiving station authorized to retain 
producer marketing cards between sales.

    (a) General. Notwithstanding any other provisions of this part, to 
facilitate the scheduling of a farmer's tobacco to the warehouse or 
receiving station, the marketing card, with the permission of the 
producer, may be retained at an eligible warehouse or receiving station 
between sales even though no producer on the farm for which the card is 
issued has tobacco on the floor for sale or to be settled for, as 
provided in this section.
    (b) Warehouse or receiving station eligible to retain producer 
marketing cards between sales. A warehouse or receiving station shall 
be eligible to retain producer marketing cards between sales if the 
operator or official thereof shall:
    (1) Execute and file on a form approved by FSA a written request 
with the State FSA committee (or county FSA committee if designated by 
the State FSA committee);
    (2) Agree to be responsible to FSA for an amount of money equal to 
the amount that may be assessed against any producer as marketing quota 
penalties, if the marketing that is the basis of assessment of penalty 
occurred while the warehouse or receiving station was authorized to 
have custody of the marketing card, for:
    (i) Burley or flue-cured tobacco, for any over marketing resulting 
from errors made at the warehouse or receiving station in entering 
``balance after sale'' pounds on the producer's marketing card or 
failure to deduct pounds sold on producer's marketing card;
    (ii) Tobacco falsely identified for marketing by use of the 
producer's marketing card;
    (iii) Producer's failure to account for any tobacco marketed by use 
of the producer's marketing card; or
    (iv) Any burley or flue-cured tobacco marketed at the warehouse or 
receiving station in excess of 103 percent of quota as shown on the 
producer's marketing card;
    (3) Agree to maintain an accurate and up-to-date journal containing 
a listing of all producer marketing cards retained by the warehouse or 
receiving station to facilitate the scheduling of farmers' tobacco. 
Such journals shall be maintained for the length of time and under the 
conditions required for other warehouse or receiving station records. 
The journal shall show for each card retained the:
    (i) Name of the operator;
    (ii) Serial number of farm (including state and county codes and 
farm number);
    (iii) Marketing card number, if applicable;
    (iv) Date marketing card was obtained from producer; and
    (v) Date marketing card was returned to producer;
    (4) Agree to return producer marketing card to the producer at any 
time the producer may so request, or in the absence of a request, 
return it to the producer within 7 days after the close of the 
warehouse or receiving station for the season; and
    (5) Agree that this authorization may be terminated by FSA for 
failure to comply with provisions of this agreement.
    (c) Penalties are considered to be the responsibility of warehouse 
operators and receiving station officials. Notwithstanding any other 
provision of this part, a warehouse operator or receiving station 
official who executes and files a written request with the Director, 
Tobacco and Peanuts Division for authorization to retain producers' 
marketing cards at the warehouse or receiving station, with producer's 
permission, shall be responsible to FSA for an amount of money equal to 
the amount that may be assessed against the producer as marketing quota 
penalties if the marketing that is the basis of such assessment 
occurred while the warehouse or receiving station was authorized to 
have custody of the marketing card, for:
    (1) Any burley or flue-cured tobacco, for any over marketing 
resulting from errors made at the warehouse or receiving station in 
entering ``balance after sale'' pounds on the producer's marketing card 
or failure to deduct pounds sold on the producer's marketing card. 
However, the warehouse operator or receiving station official shall not 
be responsible for any penalty under this subparagraph, if such penalty 
would not have been assessed against the producer in accordance with 
Sec.  723.409(e) of this part;
    (2) Tobacco falsely identified for marketing by use of the 
producer's marketing card;
    (3) Producer's failure to account for any tobacco marketed by use 
of such producer's marketing card; or
    (4) With respect to burley or flue-cured producers, tobacco 
marketed at the warehouse or receiving station in excess of 103 percent 
of quota as shown on the producer's marketing card.
    10. In Sec.  723.403 revise the section title, remove paragraph 
(h), re-designate paragraphs (i) through (v) as paragraphs (h) through 
(u), and revise paragraphs (d)(1)(ii), (d)(1)(iv), (e)(2), 
(e)(10)(iii), and newly redesignated (l) to read as follows:


Sec.  723.403  Auction warehouse operators and receiving station 
officials; records and reports.

* * * * *
    (d)(1) * * *
    (ii) For flue-cured and burley tobacco, registration number 
assigned the warehouse by the Department;
    (iii) * * *
    (iv) For flue-cured and burley tobacco, the identification of other 
producers having an interest in the tobacco;
* * * * *
    (e) * * *
    (2) Recording farm identification. For burley and flue-cured 
tobacco, at the time the tobacco is weighed in, the warehouse operator 
or receiving station official shall record on the tobacco sale bill, 
the State and county codes and the farm serial number from the 
marketing card (MQ-76 or MQ-76-C) issued for the farm from which the 
tobacco is to be marketed.
* * * * *
    (10) * * *
    (iii) Non-auction purchase by a warehouse operator. The warehouse 
operator shall deduct, from the balance of the ``103 percent of quota'' 
entry on the marketing card (MQ-76-C), the pounds of tobacco purchased 
as a non-auction purchase. In addition, each warehouse operator shall 
record on Form MQ-79 and on Form MQ-72-2, Report of Tobacco Non-auction 
Purchase, each non-auction purchase of tobacco made by such warehouse 
operator. The data to be reported on

[[Page 1561]]

Form MQ-72-2 is set forth in Sec. 723.404 of this part.
* * * * *
    (l) Bill-out invoice. For flue-cured and burley tobacco, when the 
tobacco has been sold at auction, the bill-out invoice to the buyer 
shall include the warehouse registration number on which the lot of 
tobacco was recorded on the sale bill.
* * * * *
    11. In Sec.  723.404 revise the section title and paragraph 
(c)(2)(iii) to read as follows:


Sec.  723.404  Dealer's and receiving station's records and reports, 
excluding cigar tobacco buyers.

* * * * *
    (c) * * *
    (2) * * *
    (iii) For non-auction purchases which are made from producer by the 
dealer or the receiving station official, the dealer or receiving 
station official shall remit the producer's and the dealer's or 
receiving station's share of the No Net Cost Assessment as provided in 
part 1464 of this title. The dealer may deduct the producer's share of 
the assessment from the price paid for the tobacco. However, the No Net 
Cost Assessment shall not be remitted from a producer who identifies 
the tobacco for marketing with a marketing card which has zero pounds 
as the 103 percent entry on the marketing card; a marketing penalty at 
the full rate shall be collected on the marketings identified by such 
card. The amount of the No Net Cost Assessment which is applicable to 
tobacco marketed during each marketing year will be the amount per 
pound which is approved and announced by the Secretary.
* * * * *
    12. In Sec.  723.405 revise the section title and add a new 
paragraph (c) to read as follows:


Sec.  723.405  Dealers exempt from regular records and reports on MQ-
79; season report for dealers; and receiving station resale records and 
reports exempt from daily reporting.

* * * * *
    (c) Any receiving station who acquires tobacco in the form in which 
tobacco ordinarily is sold by producers and resells such tobacco shall 
be subject to the requirements of this part.
    (1) This paragraph is applicable only to burley and flue-cured 
tobacco. Each receiving station official shall make a report to the 
Director, TPD not later than February 1 of each year for flue-cured and 
April 1 for burley tobacco, showing:
    (i) The receiving station's USDA identification number;
    (ii) Source;
    (iii) Dealer USDA identification number; and
    (iv) Pounds of all tobacco, in the form normally marketed by 
producers, purchased or sold through resale.
    (2) For resale purchases for each receiving station, the report 
shall include the following information:
    (i) USDA registration number (receiving station code),
    (ii) Name and address of receiving station,
    (iii) Gross pounds purchased,
    (iv) Name and address of seller, and
    (v) Seller's number (dealer's registration number, receiving 
station code, or farm number, including State and county code).
    (3) For resale sales for each receiving station, the report shall 
include the following information:
    (i) USDA registration number (receiving station code),
    (ii) Name and address of receiving station,
    (iii) Gross pounds sold,
    (iv) Name and address of purchaser, and
    (v) Purchaser's number (dealer registration number, receiving 
station code, or farm number, including State and county code).
    13. In Sec.  723.408 revise paragraph (d) (2)(i)(B) to read as 
follows:


Sec.  723.408  Producer's records and reports.

* * * * *
    (d) * * *
    (B) MQ-76 or MQ-76-C, to the accuracy of the Record of Sales 
recorded on the card.
* * * * *
    14. In Sec.  723.409 revise the section title and paragraphs (b) 
introductory text and (b)(4) to read as follows:


Sec.  723.409  Producer violations, penalties, false identification 
collections and remittances by dealers, buyers, handlers, warehouses, 
receiving stations and other parties; related issues.

* * * * *
    (b) Special provisions for tobacco buyers, dealers, handlers, 
warehouse operators, receiving station officials and others who 
acquire, handle, or facilitate the marketing of tobacco. 
Notwithstanding the provisions of paragraph (a) of this section and 
other provisions of this part:
* * * * *
    (4) If a penalty is collected and remitted by a buyer, dealer, 
receiving station official or warehouse operator that is shown not to 
be due or only partially due, then the overpayment shall be refunded to 
the appropriate party. It is the responsibility of the person who 
collected the penalty and the person who sold the tobacco involved to 
show to the satisfaction of FSA that such penalty is not due in the 
full amount collected.
* * * * *
    15. Revise Sec.  723.410 to read as follows:


Sec.  723.410  Penalties considered to be due from warehouse operators, 
receiving station officials, dealers, buyers and others excluding the 
producer.

    Subject to any additional requirements or provisions for 
remittances which are contained in Sec.  723.409 of this part, any 
marketing of tobacco under one of the following conditions shall be 
considered, subject to rebuttal, to be a marketing of excess tobacco:
    (a) Auction sale without burley or flue-cured tobacco marketing 
card. For burley and flue-cured tobacco, any first marketing of tobacco 
at an auction sale by a producer which is not identified by a valid 
marketing card at the time of marketing shall be considered to be a 
marketing of excess tobacco and the penalty thereon shall be collected 
and remitted by the warehouse operator unless, prior to marketing, an 
AMS inspection certificate is obtained showing that the tobacco is of a 
kind not subject to marketing quotas.
    (b) Auction sale without dark air-cured, fire-cured, or Virginia 
sun-cured tobacco marketing card. For dark air-cured, fire-cured, or 
Virginia sun-cured tobacco, any first marketing of tobacco at an 
auction sale by a producer which is not identified by a valid marketing 
card (MQ-76 or MQ-77, including sale memo) on or before the last 
warehouse sale day of the marketing season, or within 4 weeks following 
the date of marketing, whichever comes first, shall be identified by an 
MQ-82, and shall be presumed, subject to rebuttal, to be a marketing of 
excess tobacco. The penalty thereon shall be paid by the warehouse 
operator.
    (c) Burley or flue-cured tobacco non-auction sale. For burley and 
flue-cured tobacco, any non auction marketing of tobacco which:
    (1) Is not identified by a valid marketing card (MQ-76-C) and 
recorded at the time of marketing on MQ-79, Dealer's Report, the 
marketing card, and MQ-72-2, Report of Tobacco Non-auction Purchase; 
or,
    (2) If purchased prior to the opening of the local auction market 
for the current year, it is not identified by a valid marketing card 
and recorded on MQ-79, the marketing card, and MQ-72-2, Report of 
Tobacco Non-auction Purchase on or before the end of the calendar week 
(which includes the first

[[Page 1562]]

sale day of the local auction markets). The penalty thereon shall be 
collected by the purchaser of such tobacco, and remitted with MQ-79, 
unless prior to marketing an AMS inspection certificate is obtained 
showing that the tobacco is of a kind not subject to marketing quotas.
    (d) Non auction sale, except burley, flue-cured, and cigar tobacco. 
For dark air-cured, fire-cured, or Virginia sun-cured tobacco, any Non-
auction sale of tobacco which:
    (1) Is not identified by an MQ-76 or MQ-77 (including a valid sale 
memo); and
    (2) Is not recorded on MQ-79, Dealer's Record, on or before the end 
of the calendar week in which the tobacco was purchased; or
    (3) If purchased prior to the opening of the local auction market 
for the current year, is not identified by an MQ-76 or MQ-77 (including 
a valid sale memo), and recorded on MQ-79 on or before the end of the 
calendar week (which includes the first day of the local auction 
markets). The penalty thereon shall be paid by the purchaser of such 
tobacco.
    (e) Burley and flue-cured tobacco sold at a receiving station. For 
burley and flue-cured tobacco, any receiving station marketing of 
tobacco which:
    (1) Is not identified by a valid marketing card (MQ-76-C) and 
recorded at the time of marketing on MQ-80-C, MQ-76-C and MQ-72-C, on 
or before the day of the purchase. The penalty thereon shall be 
collected by the purchaser of such tobacco, and remitted with MQ-80-C 
unless prior to marketing an AMS inspection certificate is obtained 
showing that the tobacco is of a kind not subject to marketing quotas.
    (f) Failure to obtain an MQ-76 and sale memo, and failure to record 
a sale on MQ-76-cigar tobacco. Any sale of cigar tobacco for which a 
dealer:
    (1) If within quota, fails to record the sale on the marketing card 
issued for the farm; or
    (2) If the tobacco was produced on a farm for which an excess 
marketing card was issued, fails to obtain a valid sale memo by the end 
of the sale date. The penalty thereon shall be paid by the buyer who 
fails to make the record.
    (g) Leaf account tobacco. If warehouse resales exceed prior leaf 
account purchases, such marketings shall be considered to be a 
marketing of excess tobacco unless such warehouse operator furnishes 
evidence acceptable to the State FSA committee showing that such 
marketing is not a marketing of excess tobacco. However, acceptable 
evidence shall not be based on the warehouse operator's proof of 
purchases of tobacco that is not in the form normally marketed by 
producers. Such evidence is not acceptable even though it may indicate 
that the resales exceed prior leaf account purchases because of the 
blending of tobacco with the warehouse operator's prior purchases.
    (h) Dealer tobacco--burley and flue-cured. The burley or flue-cured 
tobacco resales by a dealer (as shown or due to be shown on MQ-79), 
which are in excess of such dealer's total prior purchases of the 
respective kind of tobacco, shall be considered to be a marketing of 
excess tobacco and penalty thereon shall be due at the time marketing 
takes place which results in the excess. If the resale which results in 
penalty being due is made at auction, the warehouse shall deduct the 
penalty from the proceeds of the sale and shall remit the penalty to 
the marketing recorder. If the resale which results in penalty being 
due is made at non-auction, the purchaser shall deduct the penalty from 
the proceeds of the sale and shall remit the penalty to the applicable 
State FSA office.
    (i) Receiving Station Tobacco--burley and flue-cured. The burley 
and flue-cured tobacco resales by a receiving station which are in 
excess of such buying company's total prior purchases of the respective 
kind of tobacco shall be considered to be a marketing of excess tobacco 
and penalty thereon shall be due at the time of the marketing which 
results in the excess. If the resale which results in a penalty due is 
made at auction, the warehouse shall deduct the penalty from the 
proceeds of the sale and shall remit the penalty to the marketing 
recorder. If the resale which results in penalty being due is made at 
non-auction, the purchaser shall deduct the penalty from the proceeds 
of the sale and shall remit the penalty to the applicable State FSA 
office, unless such buying company furnishes evidence acceptable to the 
State FSA committee showing that such marketing is not a marketing of 
excess tobacco. However, evidence acceptable to the State FSA committee 
shall not be based on the receiving station's proof of purchase of 
tobacco that is not in the form normally marketed by producers even 
though such evidence may indicate that resales exceed prior purchases 
as a result of the blending of tobacco, which was not in the form 
normally marketed by producers, with the receiving station official's 
prior purchases of tobacco. Multiple receiving stations purchasing as a 
single buying company may transfer pounds purchased at individual 
receiving stations that will be resold, to the buying company's dealer 
record for resale. A receiving station registration number cannot be 
used to resell tobacco at auction.
    (j) Resales not reported. Any resale of tobacco which is required 
to be reported by a warehouse operator, receiving station official or 
dealer, but which is not reported within the time and in the manner 
required, shall be considered to be a marketing of excess tobacco, 
unless and until such warehouse operator, receiving station official or 
dealer furnishes proof of such resale which is acceptable to the 
Director, TPD. The penalty thereon shall be paid by the warehouse 
operator, receiving station official or dealer who fails to make the 
report as required.
    (k) Marketing falsely identified by a person other than the 
producer of the tobacco. If any marketing of tobacco by a person other 
than the producer is identified by a marketing card other than the 
marketing card issued for the farm on which the tobacco was produced, 
and the source of production of the tobacco is unknown, such marketing 
shall be presumed to be a marketing of excess tobacco. The marketing 
quota penalty shall be paid by the person who marketed the tobacco.
    (l) Carryover tobacco, except cigar tobacco. Any tobacco on hand, 
except for cigar tobacco, and reported or due to be reported under 
Sec.  723.403 of this part for warehouse operators, Sec.  723.417 of 
this part for receiving station officials, and Sec.  723.404 of this 
part for dealers shall, be included as a resale in determining whether 
an account for a kind of tobacco has excess resales. Unless the 
warehouse operator or receiving station official furnishes proof 
acceptable to the State FSA committee, and unless the dealer furnishes 
proof acceptable to the State FSA executive director, showing that such 
account does not represent excess tobacco, penalty at the full rate for 
the respective kind of tobacco shall be paid thereon by such warehouse 
operator, receiving station official or dealer.
    (m) Unrecorded sale of cigar tobacco. Any sale of cigar tobacco 
which is not recorded on MQ-79 CF&B, Buyer's Record Book, by the 10th 
day of the month following the month during which the sale occurred, 
shall be presumed to be a marketing of excess tobacco. The penalty 
thereon shall be paid by the buyer who fails to make the record.
    (n) Floor scrap. Any receiving station official who markets floor 
scrap shall be subject to a civil penalty of 150 percent of the average 
market price for the immediately preceding marketing year, as 
determined by the U.S. Department of

[[Page 1563]]

Agriculture. The calculated penalty shall be rounded to the nearest 
whole cent. Any floor scrap on hand more than 30 days shall be 
considered sold. The floor scrap on hand shall be weighed, and the 
weight certified to, by the receiving station official, with such 
weighing to be done in the presence of a representative of either the 
county or the state FSA committee. Floor scrap which is destroyed 
within 30 days in the presence of an FSA representative shall not be 
considered as marketed when determining the total quantity of floor 
scrap marketed. If the County FSA Committee determines that floor scrap 
was marketed in the current year, the person responsible for such 
marketing shall be notified of the determination and afforded an 
opportunity to request reconsideration of such determination in 
accordance with the provisions of part 750 of this chapter. A 
determination that a civil penalty is due for marketing floor scrap 
shall not become final and shall not be assessed until such person has 
been afforded an opportunity for a hearing and such person has 
exhausted the applicable administrative remedies. Notice of assessment 
shall require such person to pay the civil penalty to ``Farm Service 
Agency, USDA'' within 15 days after the mailing date of said notice.
    (o) Floor sweepings. Any person who markets floor sweepings in 
excess of allowable floor sweepings shall be subject to a civil penalty 
of 150 percent of the average market price for the immediately 
preceding marketing year, as determined by the U.S. Department of 
Agriculture. The calculated penalty rate shall be rounded to the 
nearest whole cent. Any floor sweepings on hand more than 30 days (15 
days with respect to flue-cured tobacco) after the warehouse closes for 
the auction season shall be considered marketed. The floor sweepings on 
hand shall be weighed by the warehouse operator and the weight shall be 
certified by the warehouse operator, such weighing to be done in the 
presence of a representative of either the county FSA committee or the 
State FSA committee. Floor sweepings which are destroyed in the 
presence of a representative of the county FSA committee, within 30 
days (15 days with respect to flue-cured tobacco) after the warehouse 
closes shall not be considered as marketed when determining the 
quantity of floor sweepings marketed. If the county FSA committee 
determines, after the warehouse has been closed for the auction season 
for more than 30 days (15 days with respect to flue-cured tobacco), 
that the cumulative quantity of floor sweepings marketed and considered 
marketed in the current marketing year is in excess of the allowable 
floor sweepings, the person responsible for such marketings shall be 
given notice of the determination and shall be afforded an opportunity 
to request reconsideration of such determination in accordance with the 
provisions of part 780 of this chapter. A determination that a civil 
penalty is due for marketing floor sweepings in excess of the allowable 
floor sweepings shall not become final and shall not be assessed until 
such person has been afforded an opportunity for a hearing and such 
person has exhausted the applicable administrative remedies. The notice 
of assessment shall require such person to pay the civil penalty to the 
``Farm Service Agency, USDA'' within 15 days after the mailing of the 
notice.
    (p) Blending tobacco not in the form normally marketed by 
producers--burley and flue-cured tobacco. Tobacco purchased from 
processors or manufacturers that is considered not in the form normally 
marketed by producers, and which is blended with tobacco in the form 
normally marketed by producers, shall not be credited as a purchase to 
the dealer's or warehouse operator's account by the State FSA committee 
when reconciling the warehouse operator's leaf account or the dealer's 
purchases and resales. Tobacco not in the form normally marketed by 
producers, and which is blended with other tobacco, shall be deemed to 
be excess tobacco and penalty shall be due on the pounds of tobacco by 
which a warehouse operator's or dealer's resales exceed prior 
purchases.
    (q) Advances and other cases in which the producer's marketing card 
is used improperly. For tobacco of any kind to which this part applies, 
if tobacco is marketed by a person by using the producer's marketing 
card, or the tobacco is pledged for a price support loan by using that 
card, but under the provisions of part 1464 of this title, the producer 
is deemed to have not been an ``eligible producer'' with respect to the 
disposition of that tobacco at the time because of an advance or other 
pre-auction arrangement, then such disposition of the tobacco shall be 
considered a false identification of the tobacco and may be considered 
to be a marketing of excess tobacco. In such cases the person who paid 
the advance, took possession of the tobacco, or made the agreement with 
the producer which made the producer no longer an ``eligible producer'' 
with respect to the tobacco, shall be jointly and severally liable with 
the producer for any penalty with respect to such disposition which is 
levied against the producer under the provisions of the part. 
Furthermore, if such disposition is determined to be a marketing of 
excess tobacco, this person shall be liable for a penalty calculated by 
using the penalty rate for the tobacco involved multiplied by the 
pounds of tobacco involved. These remedies shall be in addition to any 
other remedies which may apply, including but not limited to, any 
liability for a refund of any price support loan advances which were 
paid in the name of, or for the account of, the producer of the 
tobacco.
    16. In Sec.  723.411:
    a. Redisgnate paragraph (b) introductory text as (b)(1) and 
paragraphs (b)(1) through (7) and (b)(1)(i) through (vii) respectively.
    b. Designate the undesignated paragraph following newly 
redesignated (b)(1)(vii) as (b)(2).
    c. Revise newly redesignated paragraphs (b)(1)(vii) and (b)(2).
    d. Redesignate paragraph (c) introductory text as (c)(1) and 
paragraphs (c)(1) thorugh (c)(6) as (c)(1)(i) through (vi) 
respectively.
    e. Designate the undesignated paragraph following newly 
redesignated (c)(1)(vi) as (c)(2)
    f. Revise newly redesignated paragraphs (c)(1)(vi) and (c)(2).
    The revisions read as follows:


Sec.  723.411  Records and reports regarding hauling, processing, and 
storage of tobacco.

* * * * *
    (b)(1) * * *
    (vii) Persons to whom delivered and pounds involved.
    (2) Any such firm shall report this information to the State FSA 
office of the State in which the business is located within 15 days of 
the end of the marketing year, except for tobacco handled for an 
association operating the price support program and for tobacco 
purchased at auction or tobacco which was previously reported on Form 
MQ-79 or MQ-80-C. Where such firm qualifies for the exemption in Sec.  
723.405 of this part, such firm is required to report only such tobacco 
received that does not belong to such firm.
    (c)(1) * * *
    (vi) The person to whom delivered and pounds involved.
    (2) Any such firm shall report this information to the State FSA 
office of the State in which the business is located within 15 days of 
the end of the marketing year, except for tobacco handled for an 
association operating the price support program and tobacco purchased 
by such firm at auction or for which such firm had previously reported 
on Form MQ-79 or MQ-80-C.

[[Page 1564]]

Where such firm qualifies for the exemption in Sec.  723.405 of this 
part, the firm is only required to report such tobacco received for 
storage that does not belong to such firm.
    17. Revise Sec.  723.412 to read as follows:


Sec.  723.412  Separate records and reports from persons engaged in 
tobacco related businesses.

    Any person who is required to keep any record or make any report as 
a warehouse operator, receiving station official, dealer, trucker, or 
as a person engaged in the hauling, processing, or storage of tobacco 
and who is engaged in more than one such business, shall keep such 
records as will enable such person to make separate reports for each 
such business in which such person is engaged to the same extent for 
each such business as if the person were engaged in no other business.
    18. In Sec.  723.414 revise the section title and paragraphs (a)(2) 
introductory text, (a)(2)(i), (a)(2)(ii), (b), and (c) to read as 
follows:


Sec.  723.414  Failure to keep records and make reports or making false 
reports or records.

    (a) * * *
    (2) Failure to obtain producer marketing card or sale memo. The 
failure of any dealer, receiving station official, or warehouse 
operator to obtain either of the following shall constitute a failure 
to make a report:
    (i) Producer's marketing card, MQ-76, MQ-76-C, or MQ-77, to 
identify a sale of producer tobacco, or
    (ii) Dealer identification card, MQ-79-2, to cover a resale of 
tobacco.
    (b) False representation--warehouse operators, receiving station 
officials, dealers, and processors. The monetary penalties described in 
this part are in addition to penalties prescribed by other criminal 
statutes including 18 U.S.C. 231, which provides for a fine of not more 
than $10,000 or imprisonment for not more than 5 years, or both, for a 
person convicted of knowingly and willingly committing such acts as 
making a false acreage report, altering a marketing card, falsely 
identifying tobacco or buying and selling unused ``103 percent of quota 
poundage'' on marketing cards.
    (c) Misrepresentation and scheme or device. A warehouse operator, 
receiving station official, or dealer who is determined by FSA to have 
knowingly done one or more of the following, shall pay a marketing 
quota penalty as prescribed in this part:
    (1) Adopted any scheme or device which tends to defeat the purpose 
of the tobacco program;
    (2) Made any fraudulent representation;
    (3) Misused a MQ-76, MQ-76-C or MQ-79-2; or
    (4) Sold excess tobacco.
    19. Add Sec.  723.417 to read as follows:


Sec.  723.417  Receiving station official's records and reports.

    (a) Report on Form MQ-78-C, Tobacco Receiving Station Registration. 
Each receiving station official shall annually, prior to the beginning 
of the marketing year, furnish the Director, TPD an executed Form MQ-
78-C showing:
    (1) Form of business organization, buying company name, street 
address, including city, state and zip code;
    (2) Names, street addresses and phone numbers of receiving station 
official and bookkeeper;
    (3) Names, physical addresses and phone numbers of receiving 
station officials having financial interests in other dealer 
operations, auction warehouses and other receiving stations; and
    (4) Names, addresses and phone numbers of custodians of receiving 
station records and their locations.
    (b) Separate records and reports. Each receiving station official 
shall keep the records and make the reports separately for each quota 
kind of tobacco as provided in this section.
    (c) Record of marketing. Each receiving station official shall:
    (1) For non-auction receiving station purchases, keep such records 
as will enable the receiving station official as applicable, to furnish 
the following information to FSA with respect to each purchase of 
tobacco made at such receiving station:
    (i) The name of the operator of the farm on which the tobacco was 
produced, including farm serial number, state and county code and the 
name of the producer, in the case of a sale by a producer;
    (ii) Date of purchase;
    (iii) Number of pounds purchased; and
    (iv) Amount of any penalty.
    (2) Reserved.
    (d) Tobacco sale bill for burley and flue-cured tobacco.
    (1) Each receiving station shall use tobacco sale bills furnished 
at the receiving station's expense showing, as a minimum, the following 
information:
    (i) Tobacco sale bill number;
    (ii) Registration number assigned to the receiving station by the 
Department;
    (iii) Name and street address of receiving station where purchase 
occurred;
    (iv) The identification of other producers having an interest in 
the tobacco;
    (v) Date of purchase;
    (vi) Number of pounds in each lot;
    (vii) Name and address of producer;
    (viii) Farm number (including State and county codes) for producer 
tobacco;
    (ix) Poundage balance before purchase for producer tobacco based on 
103 percent of farm quota;
    (x) Gross number of pounds purchased and balance available for sale 
after purchase;
    (xi) Sale price for each lot and gross purchase price for all lots 
sold;
    (xii) Marketing quota penalty collected; and
    (xiii) Amount withheld from purchase price to cover liens due the 
United States.
    (2) At the end of each purchase day, the tobacco sales bills shall 
be sorted and filed in numerical order by purchase date, and lot 
tickets shall be filed in an orderly manner by sale dates and by 
numerical order.
    (e) Identification of tobacco for marketing.
    (1) Marketing card. Each marketing of tobacco from a farm in any 
State for which a farm marketing quota has been established for any 
kind of tobacco shall be identified by a marketing card (MQ-76-C) 
issued for the farm on which such tobacco was produced (unless prior to 
the marketing of such tobacco an Agricultural Marketing Service 
inspection certification is obtained showing that the tobacco offered 
for sale is a kind of tobacco not subject to marketing quotas).
    (2) Recording farm identification. For burley and flue-cured 
tobacco, at the time the tobacco is staged to be weighed, the receiving 
station official shall affix a lot ticket containing the operator's 
name, address, the farm serial number (including the state and county 
codes) from the marketing card (MQ-76-C) for the farm from which the 
tobacco is marketed and a unique lot ticket number assigned by the 
receiving station to the lot of tobacco, provided:
    (i) The receiving station official, in order to facilitate 
scheduling, may stage producer tobacco one purchase day prior to 
purchase; and
    (ii) The receiving station official shall record the unique lot 
ticket number, the farm serial number (including state and county 
codes), and the weight of tobacco on the sales bill for the farm at the 
time of weighing. The price and grade shall be entered at the time of 
purchase.
    (3) Return of marketing card. For tobacco that is to be purchased 
by the receiving station, the receiving station

[[Page 1565]]

official shall retain the marketing card (MQ-76-C) until the producer 
has been paid and the FSA marketing recorder has recorded the sale on 
the reverse side of the MQ-76-C or the tobacco is removed from the 
receiving station by the producer, at which time the marketing card 
(MQ-76-C) shall be returned to the producer. In any case where a 
producer's marketing card (MQ-76-C) is found in the possession of a 
receiving station official, and there is no producer from the farm for 
which the card is issued with tobacco on the floor for sale, or with 
tobacco for which settlement is not yet complete, such card will be 
picked up by an FSA representative and returned to the producer. The 
receiving station official shall be responsible for the safekeeping and 
proper use of the marketing card during such person's retention of the 
marketing card.
    (4) Copy of sale bill. The receiving station official shall furnish 
to the producer a copy of the tobacco sale bill for any tobacco 
purchased.
    (5) Lot ticket. At the time the tobacco is weighed for marketing, 
the receiving station official shall record the weight of the lot of 
tobacco on both the tobacco sale bill and the lot ticket. The lot 
ticket number shall be recorded on the sale bill.
    (f) Non-auction sale to a receiving station. If the total pounds 
purchased by a receiving station exceed the balance of the ``103 
percent of quota'' on the farm marketing card, the sale bill shall show 
the pounds on which penalty is due and the amount of the penalty.
    (g) Payee name to be shown on receiving station check. Any 
receiving station which issues a check to cover the purchase of 
tobacco, shall issue such check only in the name of the payee. A 
receiving station check shall not be issued in the name of the seller 
and bearer, for example ``John Doe or Bearer.''
    (h) Receiving station data for burley and flue-cured tobacco.
    (1) Each official of a burley or flue-cured receiving station shall 
prepare, at the end of each sale day, an MQ-80-C, Daily Receiving 
Station Sales Summary, which is to include the following information:
    (i) Total pounds purchased,
    (ii) Total gross dollar amount of purchases,
    (iii) Total penalty pounds,
    (iv) Total amount of penalty,
    (v) The applicable farm serial number (including state and county 
codes) for penalty purchases,
    (vi) Beginning sale's bill number (numbers must be sequential 
during the season and all sale bill numbers must be accounted for),
    (vii) Ending sale bill number, and
    (viii) Daily weights of producer floor scrap.
    (2) As to the information required to be entered on MQ-80-C, Daily 
Receiving Station Sales Summary, by the marketing recorder, the 
receiving station official shall keep and make available such records 
as will enable the marketing recorder to enter thereon the total number 
of Forms MQ-72-C (manual and electronic) for the purchase day and the 
sum of the pounds purchased.
    (3) At the end of the season, each receiving station official 
shall:
    (i) Report on the final MQ-80-C for the season the quantity of 
floor scrap on hand, if any, and its location;
    (ii) Producer floor scrap tobacco shall be destroyed within five 
days of the last purchase day and the destruction thereof witnessed by 
an FSA representative;
    (iii) Permit its inspection by an FSA representative; and
    (iv) Ship all purchased tobacco within five days of the last 
purchase day of the marketing season.
    (i) Ship-out record. For flue-cured and burley tobacco, when the 
tobacco has been shipped from the receiving station to the processor, 
the ship-out bill of lading shall include the receiving station 
registration number, name and address, bill of lading number (must be 
sequential starting with the first ship-out record), lot ticket numbers 
for tobacco being shipped, date of shipment and delivery point name and 
address, and any other information deemed necessary by the Deputy 
Administrator.
    (j) Producer rejections. When a producer rejects the sale of a lot 
of tobacco, and the tobacco has been authorized for payment and the 
sale bill presented to the producer for approval, the receiving station 
official shall not change the MQ-76-C or MQ-80-C on which the sale was 
reported.
    (k) A remittance for all penalties shown by the entries on Form MQ-
80-C shall be remitted to the marketing recorder on the date the 
penalty was assessed.
    (l) Producer tobacco. Producer tobacco (first sale) in possession 
of a receiving station official which has not previously been 
identified as a purchase shall be recorded and reported on MQ-80-C as 
excess tobacco purchased by the receiving station. Penalty shall be due 
on this tobacco at the full penalty rate for the respective kind of 
tobacco.
* * * * *

7 CFR Chapter XIV

    20. Part 1464 is amended as follows:

PART 1464--TOBACCO

    21. The authority citation for 7 CFR 1464 will continue to read as 
follows:

    Authority: 7 U.S.C. 1421, 1423, 1441, 1445, 1445-1 and 1445-2; 
15 U.S.C. 714b, 714c.

    22. In Sec.  1464.10 revise paragraphs (i)(1)(i), (i)(2), 
(i)(3)(i), (i)(5) and (j)(1) to read as follows:


Sec.  1464.10  No net cost tobacco fund or account.

* * * * *
    (i) * * *
    (1) * * *
    (i) From any dealer, warehouse operator, or receiving station 
official who acquired the tobacco involved from the producer; or
* * * * *
    (2) A dealer, warehouse operator, or receiving station official 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, warehouse operator, or receiving station 
official who acquired the tobacco involved from the producer; or
* * * * *
    (5) All dealers, warehouse operators, or receiving station 
officials who are responsible for collecting any contribution or 
assessment required by this section shall remit such collections to the 
applicable association within 15 days of the date on which the tobacco 
was marketed except as provided in paragraphs (i)(5)(i) and (ii).
* * * * *
    (j) * * *
    (1) If any dealer, warehouse operator, or receiving station 
official fails to collect and remit any contributions or assessments 
according to the provisions of this section, such person shall be 
liable, in addition to that amount of contributions or assessments and 
any late payment charges, to a marketing penalty at a rate equal to 75 
percent of the average market price (calculated to the nearest whole 
cent) for the kind of tobacco for the immediately preceding year, on 
the quantity of tobacco as to which failure occurs. Such a penalty 
shall only be assessed after the person has been notified of the 
pending assessment of the penalty and the person has been afforded an 
opportunity for a hearing with respect to the assessment of the 
penalty. However, such marketing penalty shall not be assessed if such 
contributions or assessments are collected and remitted

[[Page 1566]]

not later than 15 days after the date required by this part.
* * * * *

    Signed at Washington, DC, on December 31, 2002.
Teresa C. Lasseter,
Administrator, Farm Service Agency and Executive Vice-President, 
Commodity Credit Corporation.
[FR Doc. 03-368 Filed 1-10-03; 8:45 am]
BILLING CODE 3410-05-P