[Federal Register Volume 68, Number 159 (Monday, August 18, 2003)]
[Rules and Regulations]
[Pages 49327-49329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20879]



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 Rules and Regulations
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  Federal Register / Vol. 68, No. 159 / Monday, August 18, 2003 / Rules 
and Regulations  

[[Page 49327]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1427

RIN 0560-AH03


Outside Storage of Extra Long Staple Loan Cotton

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Interim rule.

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SUMMARY: This rule amends cotton loan eligibility, packaging, and 
storage approval requirements to permit extra long staple (ELS) cotton 
to be stored outside while pledged as collateral for a Commodity Credit 
Corporation (CCC) marketing assistance loan. The intent of this rule is 
to permit producers to reduce storage costs for ELS cotton without 
increasing risk of quality or value loss to producers, merchants, CCC, 
or ultimate users of the cotton. This interim rule is effective upon 
its publication, but provides an opportunity for the public to comment 
on the administration of the new provisions.

DATES: This rule is effective August 18, 2003. Comments on this rule 
should be submitted on or before September 17, 2003 to be assured of 
consideration.

ADDRESSES: Address all comments concerning this interim final rule to 
John Johnson, Deputy Administrator for Farm Programs, USDA/Farm Service 
Agency, 1400 Independence Avenue, SW, STOP 0510, Washington, DC 20250-
0510. Comments may be submitted by electronic mail to 
[email protected], or through the Internet at 
www.regulations.gov. Comments received in connection with this rule may 
be viewed by contacting Mr. Johnson and arranging a time during normal 
business hours. Persons with disabilities who require alternative means 
for communication (Braille, large print, audio tape, etc.) should 
contact the USDA Target Center at (202) 720-2600 (voice and TDD).

FOR FURTHER INFORMATION CONTACT: John Johnson at (202) 720-3175, or via 
electronic mail at [email protected]. Persons with disabilities 
who require alternative means for communication (Braille, large print, 
audiotape, etc.) should contact the USDA Target Center at (202) 720-
2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

Current Rule

    Current CCC regulations require a warehouse operator to promptly 
place cotton stored outside within the warehouse when notified that a 
loan has been made on such cotton. CCC is amending regulations to allow 
outside storage of ELS by producers who meet the requirements of this 
interim rule. All other requirements in 7 CFR part 1427 for cotton loan 
eligibility will continue to apply.

Reason for Change

    CCC is making this change to reduce the costs to producers of 
storing ELS cotton in areas of the country where outside storage is a 
cost effective and accepted industry practice. CCC has determined that 
outside storage may be effective at lowering the costs of ELS cotton 
storage with minimal increased risk. This rule is effective beginning 
with 2003-crop ELS cotton and will be effective for subsequent crops. 
In order to implement this change, the CCC cotton marketing assistance 
loan agreement (attached to this rule as an exhibit) is also amended to 
include the following conditions:

Outside Storage Requirements

    Eligible Cotton: ELS cotton pledged as collateral for a CCC 
marketing assistance loan may be stored outside by the producer only if 
all requirements in CFR part 1427 are met except the cotton must be (1) 
hermetically sealed to maintain internal bale humidity at a certain 
level, and (2) packaged using bale ties and bags that meet or exceed 
industry minimum standards for gauge, gauge tolerance, tensile 
strength, elongation, tear resistance, impact resistance, slip 
characteristics, size or length, and rust inhibition, as applicable to 
the materials selected for use. Additionally, the producer must not 
pledge as loan collateral any bale with a torn bag that is stored 
outside.
    Storage area: The outside storage area must be: (1) Limited to an 
area identified as suitable for cotton storage; (2) constructed so as 
to prevent water accumulation under the cotton; and (3) serviced by 
bale handling equipment that will not damage the sealed bale (no bale 
hooks); and (4) serviced by bale handling and transport systems that 
will not degrade the drainage characteristics of the storage area.
    Additional limitations: CCC will not pay handling charges to move 
cotton between inside and outside storage. Also, the producer must 
deliver all outside-stored forfeited ELS to a site designated by CCC 
and re-class such cotton within 30 days after the date of delivery. The 
producer will be responsible for any charges for this delivery, re-
classification, receiving charges, weighing, issuance of an electronic 
warehouse receipt, and other charges as may be levied by the warehouse 
associated with outside-stored cotton.

Notice and Comment

    Section 1601(c) of the Farm Security and Rural Investment Act of 
2002 (2002 Act) provides that the regulations needed to implement Title 
I of the 2002 Act, including those involved here, may be promulgated 
without regard to the notice and comment provisions of 5 U.S.C. 553 or 
the Statement of Policy of the Secretary of Agriculture effective July 
24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and 
public participation in rulemaking. Because this rule involves 
technical storage and packaging requirements, it was determined that it 
was in the public's interest to solicit comments on the rule. The rule 
is effective upon publication in order to provide its benefit to 
producers for 2003, and because the rule is consistent with commercial 
storage practices used, under limited circumstances, for years.

Executive Order 12866

    This interim rule has been reviewed by the Office of Management and 
Budget under Executive Order 12866 and has been designated as ``not 
significant.''

[[Page 49328]]

Federal Assistance Programs

    This final rule applies to the following Federal assistance 
programs, as found in the Catalog of Federal Domestic Assistance: 
10.051--Commodity Loans and Loan Deficiency Payments.

Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
CCC is not required by 5 U.S.C. 553 or any other law to publish a 
notice of proposed rulemaking for the subject of this rule.

Environmental Assessment

    The environmental impacts of this rule have been considered under 
the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et 
seq., the regulations of the Council on Environmental Quality (40 CFR 
parts 1500-1508), and regulations of the Farm Service Agency (FSA) of 
the Department of Agriculture (USDA) for compliance with NEPA, 7 CFR 
part 799. An environmental evaluation was completed and the proposed 
action has been determined not to have the potential to significantly 
impact the quality of the human environment and no environmental 
assessment or environmental impact statement is necessary. A copy of 
the environmental evaluation is available for inspection and review 
upon request.

Executive Order 12778

    This rule has been reviewed under Executive Order 12778. This rule 
preempts State laws that are inconsistent with it and is not 
retroactive. Before judicial action may be brought concerning this 
rule, all administrative remedies must be exhausted.

Executive Order 12372

    This program is not subject to 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).

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because CCC is not required by 5 U.S.C. 553 or 
any other law to publish a notice of proposed rulemaking for the 
subject of this rule. Further, this rule contains no unfunded mandates 
as defined in sections 202 and 205 of UMRA.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act provides that these regulations may 
be promulgated and the programs administered without regard to chapter 
5 of title 44 of the United States Code (the Paperwork Reduction Act). 
Accordingly, these regulations and the forms and other information 
collection activities needed to administer the provisions authorized by 
these regulations are not subject to review by the Office of Management 
and Budget under the Paperwork Reduction Act.

Government Paperwork Elimination Act

    CCC is committed to compliance with the Government Paperwork 
Elimination Act, which requires Federal Government agencies to provide 
the public the option of submitting information or transacting business 
electronically to the maximum extent possible. However, the contract 
and other information collections required by this rule are not yet 
fully implemented for the public to conduct business with FSA 
electronically. CCC will make the Outside Storage Addendum available on 
the agency's Internet web site. The form may be completed and saved on 
a computer, but must be printed, signed and submitted to FSA in paper 
form.

List of Subjects in 7 CFR Part 1427

    Agricultural commodities, Cottonseeds, Price support programs, 
Warehouses.

0
Accordingly, CCC amends 7 CFR part 1427 as follows:

PART 1427--COTTON

0
1. The authority citation for part 1427 continues to read as follows:

    Authority: 7 U.S.C. 7231-7237; and 15 U.S.C. 714b and 714c.

0
2. Amend Sec.  1427.5 by revising paragraph (b)(3) and (10) to read as 
follows:


Sec.  1427.5  General eligibility requirements.

* * * * *
    (b) * * *
    (3) Be represented by a warehouse receipt meeting the requirements 
of Sec.  1427.11, except as provided in Sec. Sec.  1427.10(e) and 
1427.23(a)(4);
* * * * *
    (10) Be packaged in materials which meet the specifications adopted 
by the Joint Cotton Industry Bale Packaging Committee sponsored by the 
National Cotton Council of America for the applicable year or which are 
identified and approved by the Joint Industry Bale Packaging Committee 
as experimental packaging materials for the applicable crop year, 
except that producers approved for the outside storage of 2003 and 
subsequent crops of ELS cotton as provided for in Sec.  1427.10(e) must 
assure that the packaging materials used for bales stored outside must 
meet the materials, sealing, and humidity specifications contained in 
the outside-storage addendum to their ELS cotton marketing assistance 
loan agreement.
* * * * *

0
3. Amend Sec.  1427.10 by adding paragraph (e) to read as follows:


Sec.  1427.10  Approved storage.

* * * * *
    (e) With respect to 2003 and subsequent crops of ELS cotton, a 
producer may obtain a loan on cotton that is not stored as otherwise 
provided in this section if such cotton is stored:
    (1) At a commercial entity that is involved in the handling or 
storage of cotton in a county where the 10-year average level of 
precipitation is 10 inches or less;
    (2) The site is constructed so as to prevent the accumulation of 
water under such cotton; and
    (3) As otherwise provided in the loan agreement. The collateral for 
such loan shall be as specified in the loan agreement and may include 
the actual bale of cotton or a document of title representing such 
cotton.

0
4. Amend Sec.  1427.18 by adding paragraph (k) to read as follows:


Sec.  1427.18  Liability fo the producer.

* * * * *
    (k)(1) Notwithstanding any other provision of this part, for ELS 
cotton stored as provided in Sec.  1427.10(e), the producer shall be 
liable for all costs associated with the storage of the cotton while it 
is stored outside. CCC shall make no storage payment or any other 
payment with respect to ELS cotton stored as provided in Sec.  
1427.10(e).
    (2) The producer of ELS cotton which is stored as provided in Sec.  
1427.10(e) shall:
    (i) Certify the quantity of such cotton on the loan application;
    (ii) Be responsible for any loss in quantity or quality of such 
cotton;
    (iii) If the loan is satisfied by forfeiting the cotton to CCC, be 
responsible for all costs associated with delivering such cotton to a 
warehouse designated by CCC, all costs associated with any re-
classification and repackaging that may be required by CCC or the 
warehouse operator to whom the cotton is delivered, all charges by the 
receiving warehouse for receiving the cotton and issuing an electronic 
warehouse receipt

[[Page 49329]]

for the cotton, and other charges as may be levied by the warehouse 
specific to outside-stored cotton; and
    (iv) Not move such cotton after the loan application is submitted 
to CCC without prior written approval of the county committee. Failure 
of the producer to receive such permission shall subject the producer 
to administrative actions.

0
5. Amend Sec.  1427.21 by adding paragraph (d) to read as follows:


Sec.  1427.21  Settlement.

* * * * *
    (d) With respect to ELS cotton which is stored as provided in Sec.  
1427.10(e), settlement of loans shall be made based upon the 
determination of the quantity and quality made by CCC at the time of 
acceptance of the cotton by CCC at the warehouse designated by CCC as 
provided in Sec.  1427.18(k).

    Signed in Washington, DC, on August 7, 2003.
Verle E. Lanier,
Executive Vice President, Commodity Credit Corporation.

    Note: The following appendix will not be published in the Code of 
Federal Regulations.

U.S. Department of Agriculture

Commodity Credit Corporation

Outside Storage (Cotton) Appendix to Note and Security Agreement Terms 
and Conditions

PART A--TERMS AND CONDITIONS

    A producer submitting cotton to the Commodity Credit Corporation 
as collateral for a marketing assistance loan may store such 
collateral outside subject to the following terms and conditions:
    (1) Collateral Identification. The producer must identify all 
outside-stored cotton loan collateral by providing CCC, for each 
individual bale, the gin code number (5-digit number) and gin bale 
number (gin-assigned 7-digit number) as presented to the 
Agricultural Marketing Service (AMS) for classification services, 
and the bale net weight.
    (2) Collateral Location. The producer must provide CCC the 
address, and any additional storage location information sufficient 
to enable a CCC representative to locate the cotton.
    (3) Initial Classification Information. The producer must 
provide that AMS classification information, based on bale samples 
collected by an AMS-approved sampler, is available to CCC.
    (4) Classification Information for Forfeited ELS Cotton. In 
addition to submitting bale samples as required by paragraph (3) of 
this appendix, for all outside-stored ELS loan collateral delivered 
to CCC in satisfaction of the loan obligation, the producer is 
responsible to provide, within 30 days after the date of delivery of 
the cotton into a warehouse designated by CCC, AMS classification 
information, based on bale samples collected by an AMS-approved 
sampler.
    (5) Settlement. Notwithstanding provisions of paragraph 9(c) of 
the Note and Security Agreement Terms and Condition (form CCC-601), 
if the producer elects to forfeit outside-stored loan collateral in 
satisfaction of the amount due: (i) the value of the collateral for 
purposes of settlement will be determined using the applicable 
schedules of premiums and discounts on the basis of the 
classification information provided after delivery of the cotton to 
CCC; and, (ii) the collateral shall be delivered to CCC in the 
original bags with original bale identification as provided by the 
ginner.
    (6) Settlement Charges. If the producer forfeits outside-stored 
ELS cotton loan collateral to CCC in satisfaction of the amount due, 
the producer is liable, in addition to charges included in paragraph 
4 of the Note and Security Agreement Terms and Condition (form CCC-
601), for (i) expenses or charges associated with the storage of the 
cotton during the period of the loan, and (ii) charges levied by the 
warehouse associated with receiving, weighing, compression, issuance 
of an electronic warehouse receipt, other charges as may be levied 
by the warehouse specific to outside-stored cotton, and for 
classification services as required under paragraph (4) of this 
appendix.

PART B--PRODUCER CERTIFICATION

    I accept that the terms and conditions of this appendix apply to 
the cotton pledged as collateral for this loan. I certify that the 
cotton pledged as collateral for this loan is packaged in a 
hermetically sealed bag, packaged at a measured internal humidity 
level established by the gin as appropriate to safeguard cotton 
quality, using packaging materials that meet or exceed industry 
minimum standards. I further certify that the storage area is 
suitable for cotton storage, is constructed to prevent water 
accumulation under the cotton, is outside a 100-year floodplain, and 
is serviced by bale handling and transport equipment that will not 
damage the sealed bag or degrade the drainage characteristics of the 
storage area.
Signature of Contact Producer Date

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Signature of Other Producer Date

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Signature of Other Producer Date

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[FR Doc. 03-20879 Filed 8-15-03; 8:45 am]
BILLING CODE 3410-05-P