[Federal Register Volume 69, Number 126 (Thursday, July 1, 2004)]
[Rules and Regulations]
[Pages 39811-39814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14900]



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 Rules and Regulations
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  Federal Register / Vol. 69, No. 126 / Thursday, July 1, 2004 / Rules 
and Regulations  

[[Page 39811]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1435

RIN 0560-AH08


Flexible Marketing Allotments for Sugar

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule amends the sugar marketing allotment 
regulations with respect to processors' marketings of sugar, the 
permanent termination of processor operations, processors purchasing 
assets of another processor, processors sharing allocations among 
producers, appeals, and other related matters.

EFFECTIVE DATE: June 30, 2004.

FOR FURTHER INFORMATION CONTACT: Barbara Fecso, Dairy and Sweeteners 
Analysis, Economic and Policy Analysis Staff, Farm Service Agency 
(FSA), United States Department of Agriculture (USDA), Stop 0516, 1400 
Independence Ave., SW., Washington, DC 20250-0516. Phone: (202) 720-
4146. E-mail: [email protected]. 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).

SUPPLEMENTARY INFORMATION: 

Notice and Comment

    Section 1601(c) of the Farm Security and Rural Investment Act of 
2002 (Pub. L. 107-171, 116 Stat 183) (the 2002 Act) requires that the 
regulations implementing Title I of the 2002 Act, which includes the 
Sugar Program, are to 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. These regulations are thus issued as final.

Discussion of Changes

    Section 1403 of the 2002 Act amended the Agricultural Adjustment 
Act of 1938 (7 U.S.C. 359aa et seq.) (the 1938 Act) to establish 
flexible sugar marketing allotments. A final rule implementing the 
regulations was published August 26, 2002 (67 FR 54926), and a 
correction was published October 28, 2002 (67 FR 65690). In 
administering the program, the Commodity Credit Corporation (CCC) has 
determined that a few regulatory provisions require clarification.
    The regulations at 7 CFR 1435.307(a)(3)(i) and (ii) describe 
adjustments CCC makes to a sugar beet processor's weighted average 
sugar production history for opening or closing a ``sugar factory'' 
during the base period. This rule clarifies that the provisions refer 
to the opening or closing of a ``sugar beet processing factory,'' as 
provided by sections 359d(b)(2)(D)(ii)(I) and (II) of the 1938 Act.
    The regulations at 7 CFR 1435.307(d) provide that during any crop 
year in which marketing allotments are in effect and allocated to 
processors, the quantity of sugar and sugar products a processor 
markets shall not exceed the quantity of the processor's allocation. 
Section 1435.307(e) contains exceptions to that requirement. This rule 
adds section 1435.307(e)(4) to clarify that the provision does not 
apply to the sale of purchased sugar because the sugar would already 
have been counted as part of the original processor's marketing.
    The regulation at 1435.307(e)(3)(ii) permits a processor's 
marketings to exceed its allocation if the marketing enables the 
purchasing processor to fulfill its allocation and the marketing is 
reported to CCC within 5 days of the date of sale. This rule extends 
the time period to report the sale to 51 days because CCC is revising 
its monthly survey forms to include these sales and eliminate the need 
for separate reporting forms. Given the current schedule for submitting 
the monthly forms, the sale of overallocation sugar may take place up 
to 51 days before CCC receives the company monthly reports.
    The regulations at 7 CFR 1435.307(f) provided that CCC may charge 
liquidated damages on surplus allocation after sales made after May 1 
of the crop year if the purchasing processor had surplus allocation 
after May 1 because the purchasing processor provided incomplete or 
erroneous information provided to CCC. This rule revises the section to 
provide simply that CCC may charge liquidated damages on surplus 
allocations after the end of the crop year, if a processor provides 
incomplete or erroneous data that results in surplus allocation.
    The regulations at 7 CFR 1435.308 are revised to add a new 
provision with respect to the elimination of a processor's allocation 
when there is a permanent termination of operations. Previously, Sec.  
1435.308(b) provided that CCC will eliminate the allocation of a 
processor that has been dissolved or liquidated in a bankruptcy 
proceeding and will distribute the allocation to all other processors 
on a pro rata basis. In addition to being dissolved or liquidated in 
bankruptcy proceeding, another condition that will eliminate a 
processor's allocation, ``permanently terminated operations,'' is 
added. CCC will consider a processor to have permanently terminated 
operations if it has ceased processing for 2 complete years or notifies 
CCC that it has permanently terminated operations.
    This rule clarifies that only processors that are not purchasing 
all the assets of the selling processor must continue operation of the 
purchased plants for the remainder of the initial season and the 
following crop year. Purchasing processors that are purchasing all the 
assets of the selling processor and new entrants are not required to 
operate the acquired facilities for the required time period.
    Section 1435.308(c) provided that if a processor purchasing 
factories is not a new entrant, the purchased plants must operate for 
the remainder of the initial season and the following crop year for the 
purchasing processor to permanently obtain the allocation. It also 
provided that CCC would reassign the allocation on a pro rata basis if 
the purchased plants failed to operate for the required time period. 
This section has been renumbered as Sec.  1435.308(d).

[[Page 39812]]

    Section 1435.308(d) provided that if the purchasing processor is a 
new entrant or a processor purchasing all the assets of the selling 
processor, CCC shall immediately transfer allocation commensurate with 
the purchased factories' production history with no requirement on 
operating the facility for the required time period. This section has 
been renumbered as Sec.  1435.308(c).
    Section 1435.308(f) provides that new entrants not acquiring 
existing facilities may apply to the Executive Vice President, CCC, for 
an allocation. That provision is clarified to provide that new entrants 
that are not acquiring existing facilities with production history in 
the base period may apply for an allocation. Section 1435.308(f)(5) is 
added to provide for a hearing in accordance with the statutory 
requirement that a hearing be held on a new can sugar entrant's 
application, if requested by interested parties.
    Section 1435.310 is expanded to clarify the 1938 Act's requirement 
in section 359f so that a processor's ``allocation will be shared among 
producers served by the processor in a fair and equitable manner that 
adequately reflects producers' production histories.'' CCC has 
determined that cooperatively owned processors, not in a proportionate 
share state, have met this requirement if they share their allocation 
with their growers according to their cooperative agreement. CCC has 
determined that, for a State subject to proportionate shares, a 
processor will be in compliance with this requirement if it establishes 
a priority system for payment that pays growers first for production on 
proportionate share acreage, then for production on base acreage other 
than the proportionate share acreage, then for production on non-base 
acreage. Production from a grower with no production history at a mill 
will be considered the same as production from non-base acreage, unless 
the grower had an allocation release from a predecessor mill or was 
designated by the mill as replacing sugarcane lost to the mill after 
the 2001 crop year. In determining the payment priority in Louisiana, 
processors may aggregate the acreage of an operator (producer making 
the crop production decisions) across all the operator's farms 
delivering cane to the processor. Growers should note that there is no 
change to the requirements of Sec.  1435.318 that provide penalties for 
farms exceeding their proportionate shares if proportionate shares are 
in effect and a processor exceeds its allocation.
    Clarifying this provision of the regulation will reduce uncertainty 
about the effect the marketing allotment program has on the 
relationship between growers and processors. This clarification should 
also reduce arbitrations under the provision in the statute and 
regulation that permits a grower to request Departmental arbitration of 
disputes with processors.
    Section 1435.319(b) concerns the appeal of issues arising under 
sections 359d, 359f(b) and (c), and 359(i) of the 1938 Act and provides 
that after reconsideration of an adverse decision by the Executive Vice 
President, CCC, an adversely affected person may appeal the 
determination and that any hearings with respect to the matter shall be 
conducted by USDA's Judicial Officer. This section is revised to 
clarify that appeals of decisions of the Executive Vice President, CCC 
under section 359d are limited to the establishment of the allocations 
of marketing allotments. This is in accordance with the limited 
jurisdiction set forth in section 359i(a) of the 1938 Act. The language 
in the regulation was never intended to provide broader appeal rights 
than what was required under the statute and therefore is amended to 
clarify this.

Executive Order 12866

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

Federal Assistance Programs

    The title and number of the Federal assistance program found in the 
Catalog of Federal Domestic Assistance to which this final rule applies 
are Commodity Loans and Loan Deficiency Payments, 10.051.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable 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 matter of this rule.

Environmental Assessment

    The environmental impacts of this rule were considered for the 
sugar program final rule published in the Federal Register August 26, 
2002 (67 FR 54926). This rule does not make changes that will affect 
the Finding of No Significant Impact.

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778. This 
rule preempts State laws that are inconsistent with it. However, this 
rule 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 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) 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 about this 
rule. Nonetheless, this rule contains no mandates as defined in 
sections 202 and 205 of UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996

    Section 1601(c) of the 2002 Act requires that the regulations 
necessary to implement Title I of the 2002 Act must be issued within 90 
days of enactment and that such regulations shall be issued without 
regard to the notice and comment provisions of 5 U.S.C. 533. Section 
1601(c) also requires that the Secretary use the authority in section 
808 of the Small Business Regulatory Enforcement Fairness Act of 1996, 
Public Law 104-121 (SBREFA), which allows an agency to forego SBREFA's 
usual 60-day Congressional review delay of the effective date of a 
major regulation if the agency finds that there is a good cause to do 
so. These regulations affect the planting and marketing decisions of a 
large number of agricultural producers. Accordingly, this rule is 
effective upon the date of filing for public inspection by the Office 
of the Federal Register.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act provides that the promulgation of 
regulations and the administration of Title I of the 2002 Act shall be 
done 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 program authorized by these regulations are not subject to review 
by the Office of Management and Budget under the Paperwork Reduction 
Act.

[[Page 39813]]

List of Subjects in 7 CFR Part 1435

    Loan programs--agriculture, Price support programs, Reporting and 
recordkeeping requirements, and Sugar.

0
For the reasons set out in the preamble, 7 CFR part 1435 is amended as 
set forth below.

PART 1435--SUGAR PROGRAM

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

    Authority: 7 U.S.C. 1359aa-1359jj and 7272 et seq.; 15 U.S.C. 
714b and 714c.


0
2. In Sec.  1435.307, revise paragraphs (a)(3)(i) and (a)(3)(ii), (e) 
and (f), and add paragraph (g) to read as follows:


Sec.  1435.307  Allocation of marketing allotments to processors.

    (a) * * *
    (3) * * *
    (i) Increased 1.25 percent of the sum of all beet processors' 
weighted average sugar production for opening a sugar beet processing 
factory during the 1996 through 2000 crop years;
    (ii) Decreased 1.25 percent of the sum of beet processors' weighted 
average sugar production for closing a sugar beet processing factory 
during the 1998 through 2000 crop years:
* * * * *
    (e) Paragraph (d) of this section shall not apply to:
    (1) Any sugar marketings to facilitate the export of sugar or 
sugar-containing products;
    (2) Any sugar marketings for nonhuman consumption; and
    (3) Any processor marketings of sugar to another processor made to 
enable the purchasing processor to fulfill its allocation if such 
sales;
    (i) Are made before May 1, and
    (ii) Reported to CCC within 51 days of the date of sale.
    (f) Paragraph (d) of this section also shall not apply to 
marketings of purchased sugar marketed in the crop year of the 
purchase, but does apply to marketings of sugar purchased as part of a 
transaction pursuant to paragraph (e)(3) of this section.
    (g) CCC may charge liquidated damages, as specified in a surplus 
allocation survey and agreement, on surplus allocation after the end of 
a crop year if the processor had surplus allocation because the 
processor provided incomplete or erroneous information to CCC.

0
3. Revise Sec.  1435.308 to read as follows:


Sec.  1435.308  Transfer of allocation, new entrants.

    (a) If a sugar beet or sugarcane processing facility is closed and 
the growers that delivered their crops to the closed facility elect to 
deliver their crops to another processor, the growers may petition the 
Executive Vice President, CCC, to transfer the share of allocation 
commensurate with the growers' production history from the processor 
that closed the facility to their new processor. CCC may grant the 
request to transfer the allocation upon:
    (1) Written approval of the processing company that will accept the 
additional deliveries, and
    (2) Evidence satisfactory to CCC that the new processor has the 
capacity to accommodate the production of petitioning growers.
    (b) After a transfer of allocation described in paragraph (a) of 
this section is completed, CCC will permanently eliminate the 
processor's remaining allocation and distribute it to all other 
processors on a pro-rata basis when the processor:
    (1) Has been dissolved,
    (2) Has been liquidated in a bankruptcy proceeding, or
    (3) Has permanently terminated operations by:
    (i) Not processing sugarcane or sugar beets for 2 consecutive 
years, or
    (ii) Notifying CCC that the processor has permanently terminated 
operations.
    (c) If a purchaser purchasing the assets of another processor is a 
new entrant or is a processor purchasing all the assets of the selling 
processor, then CCC shall immediately transfer allocation commensurate 
with the purchased factories' production history.
    (d) If a processor does not purchase all of the assets of another 
processor, then the purchased factories must operate for the remainder 
of the initial season and the following crop year for the purchasing 
processor to permanently obtain the allocation. If the purchased 
factories do not operate for this required time period, CCC shall 
reassign the allocation to the other processors on a pro rata basis.
    (e) Allocations, equal to the number of acres of proportionate 
shares being transferred times the State's per-acre yield goal, will be 
transferred between mills in proportionate share States, if the 
transfers are based on:
    (1) Written consent of the crop-share owners, or their 
representatives,
    (2) Written consent of the processing company holding the 
allocation for the subject proportionate shares,
    (3) Written consent of the processing company that will accept the 
additional sugarcane deliveries, and
    (4) Evidence, satisfactory to CCC, that the additional sugarcane 
deliveries will not exceed the processing capacity of the receiving 
company.
    (f) New entrants, not acquiring existing facilities with production 
history in the base period, may apply to the Executive Vice President, 
CCC, for an allocation.
    (1) Applicants must demonstrate their ability to process, produce, 
and market sugar for the applicable crop year.
    (2) CCC will consider adverse effects of the allocation upon 
existing processors and producers.
    (3) New entrant cane processors are limited to 50,000 short tons, 
raw value, the first crop year.
    (4) New entrant cane processors will be provided, as determined by 
CCC:
    (i) A share of their State's cane allotment if the processor is 
located in Hawaii, Puerto Rico, Florida, Louisiana, or Texas, or
    (ii) A share of the overall cane allotment if the processor is 
located in any state not listed in paragraph (f)(4)(i) of this section.
    (5) CCC will conduct a hearing on a new entrant application if an 
interested processor or grower requests a hearing.
    (6) If a new entrant acquires and reopens a factory that previously 
produced beet sugar from sugar beets and sugar beet molasses, but the 
factory last operated during the 1997 crop year, CCC will:
    (i) Assign an allocation to the new entrant not less than the 
greater of 1.67 percent of the adjusted weighted average quantities of 
beet sugar produced by all processors during the 1998 through 2000 crop 
years, as determined under Sec.  1435.307, or 1,500,000 hundredweight.
    (ii) Reduce all other beet processor allocations on a pro rata 
basis.

0
4. In Sec.  1435.310, redesignate paragraph (b) as paragraph (e) and 
add new paragraphs (b), (c) and (d) to read as follows:


Sec.  1435.310  Sharing processors' allocations with producers.

* * * * *
    (b) CCC will determine that a processor in a proportionate share 
state has met the conditions of paragraph (a) of this section if the 
processor establishes a grower payment plan that incorporates the 
following provisions:
    (1) Pays growers for sugar from their delivered sugarcane in the 
following priority:
    (i) Sugar production from proportionate share acreage; as 
established under Sec.  1435.311, for producers determined by CCC, who;
    (A) Delivered to the mill in at least one of the crop years 1999, 
2000, or 2001,
    (B) Obtained an allocation transfer from a predecessor mill, or

[[Page 39814]]

    (C) Have been designated by the mill to supply sugarcane replacing 
sugarcane lost to the mill since the 2001 crop year,
    (ii) Sugar production from base acreage, as established under Sec.  
1435.312, but exclusive of the acreage described in paragraph (b)(1)(i) 
of this section, for producers who meet the requirements of paragraph 
(b)(1)(i) of this section, then
    (iii) All other sugar production.
    (2) If a mill cancels a producer's contract, the mill must permit 
the producer to move an allocation commensurate with the producer's 
production history to a mill of the producer's choice.
    (3) In determining the payment priority, a processor may aggregate 
the acreage of an operator (producer making the crop production 
decisions) across all the operator's farms delivering cane to the 
processor.
    (c) CCC will determine that a processor not in a proportionate 
share state, which is cooperatively owned by producers, has met the 
conditions of paragraph (a) of this section if the processor shares its 
allocation with its producers according to its cooperative membership 
agreement.
    (d) CCC will disclose farm base and reported acres data in a 
proportionate share state to processors upon their request for growers 
delivering to their mill. In the case of multiple producers on a farm 
or growers delivering to more than one mill, subject mills will be 
responsible for coordinating proportionate share data.
* * * * *

0
5. In Sec.  1435.319, revise paragraph (b) to read as follows:


Sec.  1435.319  Appeals and arbitration.

* * * * *
    (b) For issues arising under section 359d establishing allocations 
for marketing allotments, and sections 359f(b) and (c), and section 
359i of the Agricultural Adjustment Act of 1938, as amended, after 
completion of the process provided in paragraph (a) of this section, a 
person adversely affected by a reconsidered determination may appeal 
such determination by filing a written notice of appeal within 20 days 
of the issuance of the reconsidered determination with the Hearing 
Clerk, USDA, Room 1081, South Building, 1400 Independence Ave., SW., 
Washington, DC 20250-9200. Any hearing conducted under this paragraph 
shall be in accordance with instructions issued by USDA's Judicial 
Officer.
* * * * *

    Signed in Washington, DC, on June 25, 2004.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 04-14900 Filed 6-30-04; 8:45 am]
BILLING CODE 3410-05-M