[Federal Register Volume 69, Number 176 (Monday, September 13, 2004)]
[Rules and Regulations]
[Pages 55061-55063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20587]



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  Federal Register / Vol. 69, No. 176 / Monday, September 13, 2004 / 
Rules and Regulations  

[[Page 55061]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1435

RIN 0560-AH21


Sugar Program Definitions

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: This rule amends the Sugar Program regulations of the 
Commodity Credit Corporation (CCC). Specifically, the definitions of 
``ability to market'', ``market'' and ``sugar'' are revised. Also, the 
regulation is modified to describe the procedure used to reassign 
allocation deficits. These changes are intended to reduce the 
uncertainty and burden of sugar production forecasting.

DATES: Effective Date: This rule is effective September 13, 2004.

FOR FURTHER INFORMATION CONTACT: Barbara Fecso, Sugar Analyst, Dairy 
and Sweeteners Analysis Group, USDA, Farm Service Agency, 1400 
Independence Ave SW., Washington DC 20250-0516. 202-720-6733. E-mail: 
[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: 

Discussion of Changes

    CCC published regulations on August 26, 2002 (67 FR 54928), to 
implement the Sugar Program provisions of Title I of the Farm Security 
and Rural Investment Act of 2002 (the 2002 Act). That rule governed 
various activities affecting sugar beet and sugar cane producers and 
processors and the domestic market for sugar. In this rule, CCC is 
making two changes to Sugar Program regulations as a result of 
definitions that have had an unintended affect on program 
administration. The changes are as follows:
    The definition of ``ability to market'' is being changed to 
discourage excess sugarcane acreage and reduce the uncertainty and 
burden of sugar production forecasting. ``Ability to market'' is used 
in conjunction with two other factors to determine each cane sugar 
state's marketing allotment and each sugarcane processor's allocation 
within a state. ``Ability to market'' was measured as the quantity of 
raw sugar produced during the applicable crop year. This definition 
disregards beginning stocks, which is part of a processor's ability to 
fulfill its allocation. This exclusion discourages cane processors from 
filling their allocation from stocks and encourages continued planting 
to maintain their allocation.
    The accrual of large stocks that must be carried over into the next 
year due to the imposition of marketing allotments is increasing the 
likelihood of problems with the current definition of ``ability to 
market''. The problem created by excluding beginning stocks would be 
aggravated in cane disasters. A substantial loss in forecast cane sugar 
production would result in a considerable reduction in a processor's 
sugar marketing allocation, regardless of the processor's stock level.
    The current definition of ``ability to market'' requires CCC to 
estimate crop year production for each state and processor using 
periodic processor surveys. State allotments and processor allocations 
are adjusted as these estimates change throughout the year. This 
process creates uncertainty for the sugarcane processors and a 
significant administrative burden for CCC and processors.
    Hawaii and Puerto Rico already have a fixed allotment and their 
state allotment and processor definition of ``ability to market'' will 
not be changed. For the mainland states, the new definition for 
``ability to market'' will be based on the states' and processors' 1999 
through 2003 crop year production history. The mainland states' 
``ability to market'' will be measured as the production from the 
highest production year for each state in the base period. This same 
measure of ``ability to market'' will be used to divide the Florida 
cane sugar marketing allotment among the state's processors. CCC will 
divide the Louisiana cane sugar marketing allotment among the state's 
processors using an average of (1) an Olympic average over the base 
period and (2) the 2003 crop. CCC will use the 2003-crop estimate of 
production that it used to develop the July World Agricultural Supply 
and Demand Estimates.
    Since the other two factors are based on historical production, the 
cane states' allotments and processor allocations will now be based 
completely on historical data. Since allotments and allocations are not 
dependent on current production, the data collection burden on CCC and 
the processors, and the incentive to maintain sugarcane acreage is 
reduced. Allocations will balance with available sugar as processors 
sell over-allocation sugar to processors that need it, in accordance 
with the regulations, and as CCC reassigns unused allocation between 
processors and unused allotment between states.
    The ``ability to market'' definition does not affect the 
reassignment process. The 2002 Act requires CCC to determine, from time 
to time, if a processor is unable (and conversely, able) to market its 
allocation. Consistent with the 2002 Act, CCC uses the best available 
data to make its determination and specifically lists then-current 
inventories of sugar, the estimated production of sugar and expected 
marketings, and other pertinent factors. CCC determines if a processor 
is unable to market its allocation by comparing a processor's sugar 
supply (with some exceptions) with its allocation. Specifically, CCC 
calculates a processor's available crop-year supply as its beginning 
stocks, plus production and purchased over-allocation sugar, less sales 
of over-allocation sugar, and desired ending stocks (generally zero). 
CCC recognizes that it should reduce supply by nonhuman use sales and 
exports but has not done so to date. Early reassignments require CCC to 
use estimates subject to error and allocation cannot be returned to a 
processor because too much was taken away. Thus, CCC will be more 
conservative in reducing a processor's allocation earlier in the year 
than later. At this time, CCC has no measure of its early conservatism 
but will work with the processors losing allocation to permit them a 
margin of

[[Page 55062]]

error beyond the formula results. This process worked satisfactorily in 
FY 2003.
    The second change CCC is making is to clarify the definitions of 
market and marketing to include sales for non-domestic consumption, 
nonhuman consumption, and sales to another processor to enable that 
processor to fulfill its marketing allocation. The current definition 
for market and marketing excludes these sales. However, 7 CFR 1435.307 
describes these types of sales as ``marketings,'' but exempts them from 
being subject to the restriction of a processor's marketing 
allocations. CCC is developing procedures to ensure that sales for non-
domestic consumption and nonhuman consumption, which also are not 
counted against a processor's sugar marketing allocation, are bona fide 
sales that do not affect the domestic food use market.
    The new definition provides that the sale of sugar for non-domestic 
consumption, nonhuman consumption, or to another processor will be a 
sugar ``marketing'' regulated by 7 CFR 1435. This result is 
accomplished by deleting the sentence that excludes these sales from 
the ``marketing'' definition. The regulation retains the exemption for 
sales made before May 1, reported to CCC within 51 days.
    The third change CCC is making is to clarify the definition of 
sugar to include in-process sugar, such as thick juice, in the current 
7 CFR part 1435 definition, but implied elsewhere in the regulation 
language.
    CCC modifies the reassignment provisions in Sec.  1435.309 to 
explain more fully CCC's reassignment procedures. This rule also 
replaces the ``by May 1'' in section 1435.309(a) with language of the 
2002 Act, ``from time to time''. May 1 is not an appropriate time to 
make reassignment determinations for all processors because CCC permits 
processors to buy or sell over-allocation sugar until May 1. The 
deadline ``by April 15'' is eliminated in section 1435.309(b) for the 
same reason.

Notice and Comment

    These changes will not be published with a request for public 
comment, and will be implemented with a final rule. Section 1601(c) of 
the Farm Security and Rural Investment Act of 2002 (2002 Act) provides 
that the regulations needed to administer 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. The rule will be effective upon 
publication in order to provide its benefit to producers as soon as 
possible.

Executive Order 12866

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

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 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 information 
collections required by 7 CFR part 1435 rule are not yet fully 
implemented for the public to conduct business with FSA electronically. 
CCC Sugar Program forms are available on the agency's Internet web 
site. Forms 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 1435

    Loan programs--agriculture, Price support programs, Reporting and 
record keeping 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 for 7 CFR part 1435 continues to read as follows:

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

Subpart A--General Provisions

0
2. In Sec.  1435.2, revise the definitions of ``ability to market,'' 
``market or marketing'', and ``sugar'' to read as follows:


Sec.  1435.2  Definitions.

* * * * *

[[Page 55063]]

    Ability to market means, for purposes of determining the State cane 
sugar allotments and sugarcane processor allocations for Hawaii and 
Puerto Rico, the estimated quantity of sugar, raw value, as CCC 
determines, that will be produced in the cane State or by the sugarcane 
processor, as appropriate, during the applicable crop year; for 
determining the remaining State cane sugar allotments, the highest 
single year of sugar production for the State during the 1999 through 
2003 crop years; for determining the sugarcane processor allocations 
for mainland cane States other than Louisiana, the highest single year 
of sugar production for the processor during the 1999 through 2003 crop 
years; and, for determining the sugarcane processor allocations for 
Louisiana, the simple average of two amounts for each processor, 
including:
    (1) The production of sugar for the processor, stated in short 
tons, raw value, during Crop Year 2003, as determined by CCC; and
    (2) The simple average of 3 years of the processor's production of 
sugar, stated in short tons, raw value, from among the 1999 through 
2003 crop years, excluding the year in which the production was the 
highest and the year in which the production was the lowest. With 
respect to the 2003 crop year, each processor's production shall be the 
same as determined under paragraph (1).
* * * * *
    Market or marketing means the transfer of title associated with the 
sale or other disposition of sugar in United States commerce, including 
the forfeiture of sugar loan collateral under Subpart B, and for any 
integrated processor and refiner, the movement of raw cane sugar into 
the refining process.
* * * * *
    Sugar means any grade or type of saccharine product derived, 
directly or indirectly, from sugarcane, sugar beets, sugarcane molasses 
or sugar beet molasses and consisting of, or containing, sucrose or 
invert sugar, including raw sugar, refined crystalline sugar, edible 
molasses, edible cane syrup, liquid sugar, and in-process sugar.
* * * * *

Subpart D--Flexible Marketing Allotments for Sugar

0
3. In Sec.  1435.309 revise paragraphs (a), (b), and (c) to read as 
follows:


Sec.  1435.309  Reassignment of deficits.

    (a) CCC will determine, from time to time, whether sugar beet or 
sugarcane processors will be unable to market their allocations.
    (b) Sugar beet and sugar cane processors will report to CCC current 
inventories, estimated production, expected marketings, and any other 
pertinent factors CCC deems appropriate to determine a processor's 
ability to market their allocation.
    (c) If CCC determines a sugarcane processor will be unable to 
market its fall allocation for the crop year in which an allotment is 
in effect, the deficit will be reassigned by June 1:
    (1) First, to allocations of other sugarcane processors within that 
State based on each processor's initial allocation share of the State's 
allotment, but no processor may receive reassigned allocation such that 
its allocation exceeds its estimated total sugar supply.
    (2) If the deficit cannot be eliminated after reassignment within 
the same State, be reassigned to the other cane States based on each 
State's initial share of the cane sugar allotment, but no State may 
receive reassigned State allotment such that its allocation exceeds its 
estimated total sugar supply, with the reassigned quantity to each 
State being allocated according to paragraph (c)(1) of this section.
* * * * *

    Signed in Washington, DC, on September 1, 2004.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 04-20587 Filed 9-10-04; 8:45 am]
BILLING CODE 3410-05-P