[Federal Register Volume 70, Number 170 (Friday, September 2, 2005)]
[Rules and Regulations]
[Pages 52283-52285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17500]



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  Federal Register / Vol. 70, No. 170 / Friday, September 2, 2005 / 
Rules and Regulations  

[[Page 52283]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1405

RIN 0560-AH35


Collection of State Commodity Assessments

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule sets forth the Commodity Credit Corporation's 
(CCC) policy with respect to implementation of the discretionary 
authority provided to it by Public Law 108-470. This act allows for the 
collection of assessments levied on the marketings of agricultural 
commodities. Generally, these assessments are required, under State and 
Federal law, to be paid from CCC marketing assistance loan proceeds by 
a producer who markets the commodity or are required to be collected by 
the first purchaser of the commodity. This final rule adopts, with 
changes, the proposed rule published in the Federal Register on June 7, 
2005 (70 FR 33043).

DATES: This rule is effective September 2, 2005.

FOR FURTHER INFORMATION CONTACT: Kimberly Graham, 202-720-9154, 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 Final Rule

    On June 7, 2005, CCC issued a proposed rule with respect to the 
manner in which it proposed to collect agricultural commodity 
assessments owed by a producer to a State or State agency when the 
producer had obtained a CCC marketing assistance loan. (70 FR 33043). 
The rule provided that CCC would deduct from marketing assistance loan 
proceeds an amount equal to any assessment required under State or 
Federal law to be paid by a producer who markets the commodity, or by 
the first purchaser of the commodity. The preamble of that rule 
described the history of CCC's role in collecting commodity 
assessments, the statutory authority allowing CCC to engage in the 
collection of commodity program assessments, and the necessity to 
codify the process for collecting commodity assessments. With respect 
to the collection of State assessments, the major provisions of the 
proposed rule included: (1) A request for CCC to engage in the 
collection activity must initially be submitted by the Governor of the 
State; (2) such request must identify the entity that the Governor has 
designated to enter into the collection agreement with CCC; (3) a 
statement from the Attorney General, at any time prior to final 
execution of the agreement, that the agreement is in compliance with 
applicable State laws and the provisions of section 1(a) of Public Law 
108-470; (4) collection of the assessment, as requested by the 
Governor, may be at either the time the marketing assistance loan is 
disbursed to the producer or at the time of forfeiture of the commodity 
to CCC, but not both; and (5) the State agrees to indemnify CCC for any 
costs incurred in collecting the assessment, including costs relating 
to resolution of disputes arising from the requested collection of the 
assessment.
    With respect to assessments collected under Federal statutes, the 
proposed rule provides that collections will be made as provided in 
such manner as may be agreed upon by CCC and the entity to whom the 
Secretary has delegated responsibility to otherwise engage in 
collection activities.

Comments and Changes to Final Rule

    The 30-day comment period for the proposed rule closed on July 7, 
2005. CCC received 36 responses from entities or persons, which 
included 22 agricultural commodity associations, nine producers, two 
Agency employees, two Designated Marketing Associations (DMA's), one 
State Department of Agriculture and one State Senator. In general, the 
majority of the responses support the intent and implementation of the 
proposed regulation. Seven commenters opposed the collection and 
deduction of commodity assessments from a producer's marketing 
assistance loan proceeds and five commenters support the proposed 
regulation as written. These comments were submitted without any 
additional explanations. CCC analyzed the public comments received and 
has decided to adopt the proposed rule, with some slight modifications 
as discussed below based on these comments.
    One respondent requested specific information regarding the number 
of forfeited loans in the State of South Dakota. This comment did not 
address provisions of the proposed rule and was not within the scope of 
the proposed rule.
    One commenter stated producers are better served by collecting the 
assessments at forfeiture rather than at loan disbursement. The 
commenter identified two specific reasons for collecting the assessment 
at the time of forfeiture rather than at loan disbursement. The first 
reason suggested that certified farm-stored marketing assistance loans 
may not accurately reflect the producer's harvested quantity; 
therefore, the assessment amount collected may not be accurate. The 
actual quantity delivered in satisfaction of the marketing assistance 
loan is determined at the time the commodity is sold or forfeited. The 
quantity delivered may differ from the quantity pledged as collateral 
for the marketing assistance loan. Collection of additional assessment 
amounts may be necessary. The second reason suggested producers may 
oppose the collection of commodity assessments at the time of loan 
making because the producer is responsible for the repayment of the 
full loan amount disbursed plus interest, if the producer repays the 
marketing assistance loan at principal plus interest. Therefore, the 
producer would be paying interest on the assessment amount deducted 
from the loan proceeds. CCC believes the proposed rule supports Public 
Law 108-470; therefore, these comments are not adopted and no changes 
were made.
    One commenter suggested that, in the case of an approved 
Cooperative Marketing Association (CMA) or Designated Marketing 
Association (DMA), the entire marketing assistance

[[Page 52284]]

loan be disbursed to the CMA or DMA and the CMA or DMA be responsible 
for deducting the applicable commodity assessment and remitting the 
commodity assessment to the State entity. An approved CMA or DMA is 
eligible to receive marketing assistance loans or LDP's on behalf of 
their eligible producer members. CCC agrees with the commenter and 
believes it would be more difficult and complex to handle individual 
producer members' multi-state commodity assessment deductions. Since 
the CMA and DMA have administrative processes in place to monitor 
producer members' marketing assistance loan and LDP amounts and 
cooperative pool sale amounts for its' members amounts, CCC believes 
the CMA and DMA will ensure that fair and accurate distribution of the 
commodity assessment deductions will be made to the specific State 
entity. Therefore, the comments are adopted and such changes are 
included in the final rule.
    More specific responses addressed particular provisions of the rule 
with respect to the collection of State commodity assessments. Some 
responses contained multiple comments. These comments are discussed 
below on a section-by-section basis, along with the changes that have 
been made to the interim rule.

Section 1405.9(b)(1)-(2)

    Nine respondents opposed the provisions in section 1405.9(b)(1) and 
(2) that require the Governor of the State to request that the 
assessment be collected and the Attorney General of the State, or a 
person authorized to act on behalf of the Attorney General, provide CCC 
an opinion that the collection activity is authorized by State law and 
complies with the provisions of section 1(a) of Public Law 108-470. 
Most of the respondents suggested that the request from the Governor 
was superfluous since the state commodity commissions are created by 
State statute and are agencies of the State. It was suggested that a 
request from a state commission and a copy of the enabling legislation 
should be deemed sufficient for the purpose of making the initial 
request. Commenters also believe that obtaining a separate opinion from 
the Attorney General would be costly, time consuming, and redundant. In 
prior years, CCC has routinely required that approval from the Office 
of the Attorney General for a State be obtained by the party entering 
into such an agreement with CCC in order to ensure that such party has 
the authority to bind the State with respect to all of the provisions 
of the agreement. Specifically, CCC is concerned that such party must 
be able to obligate the State to reimburse CCC for any costs it may 
incur in the event CCC is sued by a party who objects to the collection 
of the assessment on behalf of the State. Accordingly, CCC will 
continue to require that such approval has been obtained before CCC 
will enter into an agreement to collect the assessment.

Section 1405.9(c)(1)-(2)

    Several comments opposed the provisions in sections 1405.9(c)(1) 
and (2) that requires the State to indemnify CCC for any costs incurred 
in collecting the commodity assessment and that the producer have the 
ability to request from the State a refund of the assessment collected 
from the producer's marketing assistance loan. Several respondents 
expressed uncertainty as to whether the costs would include CCC 
administrative costs associated with routinely collecting and 
processing assessments. Commenters also expressed opposition towards 
the indemnification provision, if the provision included those types of 
administrative costs. The action of CCC in collecting State authorized 
commodity assessments provides no benefit to CCC and results in the 
expenditure of funds appropriated to FSA; the loss of these 
expenditures directly affects the ability of FSA to undertake its own 
activities. Accordingly, CCC has determined, since the beneficiary of 
this action is the State or State agency requesting the assessment be 
collected, that the costs of such action should not be borne by CCC or 
FSA.
    With respect to allowing the producer to request from the State a 
refund of the collected assessment, CCC is required by statute to 
provide a certain levels of assistance to producers. By deducting state 
commodity assessments from the marketing assistance loan proceeds and 
not at the time of actual marketing increases the risk of the producer 
paying double assessments. A double assessment would result in a 
reduction of the statutory level of assistance required to be provided 
by CCC. Also, CCC is not responsible for tracking double assessments or 
for making refunds of double assessment collections to the producer. 
For that reason the final rule retains this requirement for the 
agreement; however, the final rule will clarify that the mandatory 
refund is applicable to refunds of double assessment collections.

Executive Order 12866

    This rule is issued in conformance with Executive Order 12866, was 
determined to be not significant, and has not been reviewed by the 
Office of Management Budget.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is 
applicable to this final rule.

Environmental Assessment

    The environmental impacts of this final rule have been considered 
consistent with the provisions of 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 the FSA 
regulations for compliance with NEPA, 7 CFR part 799. FSA concluded 
that the rule requires no further environmental review because it is 
categorically excluded. No extraordinary circumstances or other 
unforeseeable factors exist which would require preparation of an 
environmental assessment or environmental impact statement.

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988. This final rule preempts State laws that are inconsistent 
with it. This rule is not retroactive. Before any legal action may be 
brought regarding a determination under this rule, the administrative 
appeal provisions set forth at 7 CFR parts 11 and 780 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 3014, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates Reform Act of 1995.

    The rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, Local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

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 
made 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

[[Page 52285]]

needed to administer the program authorized by these regulations are 
not subject to review by OMB under the Paperwork Reduction Act.

Executive Order 12612

    This rule does not have sufficient Federalism implications to 
warrant the preparation of a Federalism Assessment. The provisions 
contained in this rule will not have substantial direct effect on 
States or their political subdivisions or on the distribution of power 
and responsibilities among the various levels of government.

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.

List of Subjects in 7 CFR Part 1405

    Agricultural commodities, Feed grains, Grains, Loan programs--
agriculture, Oilseeds, Price support programs, Reporting and record 
keeping requirements.


0
Accordingly, 7 CFR part 1405 is amended as follows:

PART 1405--LOANS, PURCHASES, AND OTHER OPERATIONS

0
1. The authority citation for part 1405 is revised to read as follows:

    Authority: 7 U.S.C. 1515; 7 U.S.C. 7991(e); 15 U.S.C. 714b and 
714c; and Public Law 108-470.

0
2. Add Sec.  1405.9 to read as follows:


Sec.  1405.9  Commodity assessments.

    (a) CCC will deduct from the proceeds of a marketing assistance 
loan an amount equal to the amount of an assessment otherwise required 
to be remitted to a State agency under a State statute by the producer 
of the commodity pledged as collateral for such loan or by the first 
purchaser of such commodity subject to the requirements of paragraph 
(b) of this section.
    (1) The assessment will be collected in one of the following ways, 
as requested by the State, but not both:
    (i) When the proceeds of the loan are disbursed; or
    (ii) When the commodity pledged as collateral for the loan is 
forfeited to CCC, in which case CCC will collect from the producer the 
amount of the assessment submitted by CCC to the State.
    (2) CCC will deduct from the proceeds of a marketing assistance 
loan an amount equal to the amount of an assessment otherwise 
authorized to be remitted to a federally authorized entity under a 
Federal statute by the producer of the commodity pledged as collateral 
for such loan or the first purchaser of such commodity in the manner 
agreed to by CCC and the entity to whom the Secretary of Agriculture 
has authorized to collect such assessments.
    (b) CCC will collect commodity assessments authorized under a State 
statute when:
    (1) The State entity has:
    (i) Requested that the assessment be collected;
    (ii) Identified whether the assessment is to be collected at the 
time the loan proceeds are disbursed or at the time the commodity is 
forfeited to CCC;
    (iii) Identified the person who may enter into an agreement with 
CCC that sets forth the obligations of the State and CCC with respect 
to the collection of the assessment; and
    (iv) Provided an opinion from the Office of the Attorney General to 
CCC that concludes the person signing the agreement may obligate the 
State to comply with the agreement and the provisions of Public Law 
108-470 have been met.
    (2) The agreement described in paragraph (c) of this section has 
been executed by the appropriate State official and CCC.
    (c) CCC will enter into an agreement with an authorized State 
official to collect commodity assessments when the actions set forth in 
paragraphs (b)(1) and (2) of this section have been completed. Such 
agreement will contain the obligations and responsibilities of the 
State and CCC. All such agreements will include provisions that 
provide:
    (1) The State will indemnify CCC for any costs incurred in the 
collection of the assessment including costs incurred with respect to 
resolution of disputes arising from the requested collection of the 
assessment and for administrative costs incurred by CCC in the 
collection of the assessment;
    (2) The State, in cases where an assessment has been collected two 
or more times with respect to the same quantity of the commodity 
subject to the assessment, will refund the amount of the excess 
collection to the producer.
    (3) The agreement may be terminated by either party upon 30 days 
notice.
    (4) The State, in cases where the marketing assistance loan is made 
by a cooperative marketing association or a designated marketing 
association approved by CCC, or any other similar entity that is 
approved by CCC, to obtain such a loan on behalf of its members may 
enter into individual arrangements with such entity to facilitate the 
collection of the assessment with the approval of CCC.

    Signed in Washington, DC, on August 17, 2005.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 05-17500 Filed 9-1-05; 8:45 am]
BILLING CODE 3410-05-P