[Federal Register Volume 71, Number 17 (Thursday, January 26, 2006)]
[Rules and Regulations]
[Pages 4231-4234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-742]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 71, No. 17 / Thursday, January 26, 2006 / 
Rules and Regulations  

[[Page 4231]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR 1427

RIN 0560-AH29


Cottonseed Payment Program

AGENCIES: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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

SUMMARY: This final rule codifies portions of the Military Construction 
Appropriations and Emergency Hurricane Supplemental Appropriations Act, 
2005, enacted on October 13, 2004 Public Law 108-324 (``2004 Act'') to 
provide assistance to producers and first-handlers of the 2004 crop of 
cottonseed in counties declared a disaster by the President of the 
United States due to 2004 hurricanes and tropical storms. Other 2004 
Act disaster provisions for other crops were implemented under separate 
rules.

DATES: This rule is effective January 26, 2006.

FOR FURTHER INFORMATION CONTACT: Chris Kyer, phone: (202) 720-7935; e-
mail: [email protected].

SUPPLEMENTARY INFORMATION:

Discussion of Final Rule

    In a proposed rule published in the Federal Register at 70 FR 36536 
(June 24, 2005), the Commodity Credit Corporation (CCC) proposed 
regulations for administering the 2004 Cottonseed Payment Program 
authorized by Division B, Section 104 of the 2004 Act (Pub. L. 108-
324). The 2004 Act requires CCC to provide assistance to producers and 
first-handlers (cotton gins) of the 2004 crop of cottonseed in counties 
declared a disaster by the President of the United States due to 
hurricanes and appropriated $10 million for these payments. As amended, 
by Section 789 of Division A of the Consolidated Appropriations Act, 
2005 (Pub. L. 108-447), Section 104 provides:

    The Secretary of Agriculture shall use $10,000,000 to provide 
assistance to producers and first handlers of the 2004 crop of 
cottonseed located in counties declared a disaster by the President 
of the United States in 2004 due to hurricanes or tropical storms.

    The proposed rule described how the program was last administered 
for the 2002 crop year and how the 2004 program will be operated 
differently from the 2002 program. To summarize, the 2002 program used 
2002 crop year production as a basis for payment because all gins in 
the nation were eligible and the intent of the program was to offset 
the effect on producers of low cottonseed prices. However, because the 
2004 program is tied to legislation that involves hurricanes and 
tropical storms, the agency's intent with the 2004 Cottonseed Payment 
Program was to base payments on a loss of cotton lint (to be converted 
to a cottonseed equivalent), not actual lint production. Therefore, the 
rule proposed that the applicant's quantity for payment will be 
calculated by a gin by comparing each of their eligible producer's 2003 
lint production to their 2004 lint production and adjusting the 
difference to reflect changes in planted acreages between the two 
years. The gin would then add up their producer's losses to arrive at a 
total quantity for which to request payment. The rule also provided for 
situations where the cotton producer did not produce 2003 cotton or 
when the producer may have delivered 2004 cotton to a different gin 
than for 2003. Other key provisions of the rule provided regulations 
for eligible cottonseed, eligible applicants, available funds, agency 
calculation of the total payment quantity, determining the payment 
rate, and liability of first handler.

Comments and Changes to Final Rule

    The 30-day comment period for the proposed rule closed on July 25, 
2005. FSA received comments from 28 entities or persons which included 
4 cotton associations, 2 gins, 10 United States Senators, and 10 
Congressmen. In general, the respondents consistently expressed 
concerns about how the proposed rule will place administrative burden 
on gins, particularly at a time when cotton is being harvested and 
ginned, and recommended that USDA identify a more efficient and less 
burdensome way to deliver the program. However, two cotton associations 
conceded that while the proposed rule is much more complicated than 
previous cottonseed assistance programs and puts a much heavier 
administrative burden on cotton ginners, it does seem to be the most 
equitable way to distribute assistance to producers who suffered 
production losses.
    Specifically, the letters from 10 Senators and Congressmen cited 
the additional administrative burden placed upon gins by the proposed 
rule but did not offer alternative recommendations. One ginner 
expressed concern about the administrative burden, plus the potential 
for conflict created by the proposed rule between the gin and the 
producer where the gin cannot control the outcome of the rules but is 
blamed for the results nonetheless. Another ginner specifically 
recommended a distribution of assistance based on 2003 crop year lint 
production which would be more equitable and less burdensome to 
producers and ginners. Two associations stated that cotton ginners are 
willing to gather data from producers but suggested an extended 
application time of 45 to 60 days. These two associations also 
suggested use of a standard form that producers can use to provide 
production and acreage data to their gins that also provides a 
certification by producers that they are responsible for the accuracy 
of the data on the form. Two additional associations submitted similar 
recommendations and suggested the use of a form by producers with a 
self-certification clause that would shift liability from gins to 
producers, an application period of at least 45 days, clarification of 
provisions regarding producers who did not plant cotton in either 2003 
or 2004, and the use of a lint-to-cottonseed conversion factor based on 
the national average as in past programs. Further, these associations 
requested that all gins in states with eligible disaster counties 
receive disaster application information and the eligible county list.
    More specific comments are discussed below section by section, 
along with minor changes that will be made in the final rule.

[[Page 4232]]

Section 1427.1100 Applicability

    Three cotton associations suggested that gins in states with 
disaster-declared counties should receive application information and 
an eligible county list in order to account for all eligible 
production. While there was no recommendation as to how to carry out 
the suggestion, CCC agrees that program information must be easily 
available and will, therefore, make the instructions, forms and list of 
eligible counties available to gins electronically on the internet or 
by electronic mail. This provision will be handled administratively. 
Therefore, the section is adopted as proposed.

Section 1427.1105 Payment Application and Deadline

    Four associations stated that in order to administer the program as 
USDA proposes they will need additional time to gather data from 
producers, perform necessary calculations and prepare applications to 
CCC. One association suggested an application deadline of 45 to 60 
days, and three associations suggested at least 45 days. CCC agrees 
that additional time may be necessary for gins to gather data from 
producers that are not currently on file, to compile such data, and 
prepare an application. Thus, the final rule provides that gins have 60 
calendar days from the date the program is announced in the Federal 
Register to file applications with CCC.

Section 1427.1107 Applicant Payment Quantity

    All of the respondents cited the additional burden the proposed 
rule would place on gins as compared to previous Cottonseed Payment 
Programs. Specifically, the proposed rule provided that gins must 
differentiate production from producers located in eligible and non-
eligible counties, gather data from producers or other gins if a 
producer ginned cotton at a different gin in 2003, calculate expected 
production for new producers who did not produce cotton in 2003, and 
calculate lint production losses for each producer based on 2003 and 
2004 production, adjusting such losses for differences in acreage 
between the two years. This required gins to gather from producers data 
not already on file such as planted acreages and data for producers new 
to the gin. CCC recognizes that, compared to past programs, gins will 
be required to perform additional work and thoroughly explored other 
options to ease the burden, such as simply using 2003 production as a 
basis for payment or comparing 2003 production to 2004 production 
without considering the difference in acreages between the two years. 
After consideration, both options were determined to be fiscally 
irresponsible ways to operate a disaster-related program. Therefore, 
the section will be adopted as proposed. However, CCC will make every 
effort to assist gins in obtaining the data necessary that they do not 
currently have on file and will provide additional time for the gins to 
gather data and to prepare applications for submission to CCC.

Section 1427.1108 Total Payment Quantity

    Two associations recommended that the eligible quantity of 
cottonseed for payment be determined using a conversion factor based on 
the national average and cited the national average seed-to-lint ratio 
as used for past programs. CCC did propose a different formula for 
computing the seed-to-lint ratio from what was done in the past, except 
for using the five years preceding 2004. Thus, CCC adopts Sec.  
1427.1108(b) as proposed.

Section 1427.1111 Liability of First Handler

    Two cotton associations cited the need for a shift in data 
liability from the gin to the producer when additional data must be 
gathered by the gin that the gin does not already have, such as acreage 
data. It was suggested that data be provided by producers on a form 
containing a self-certification clause that would shift liability and 
also provide documentation if an audit is necessary or if a dispute 
arises. CCC disagrees that liability should be shifted to the producer 
because the gin is the applicant and recipient of program benefits. 
Therefore this section is adopted as proposed.

Executive Order 12866

    This 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).

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 with respect to the subject of this rule.

Environmental Assessment

    The environmental impacts of this 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 FSA's 
regulations for compliance with NEPA, 7 CFR part 799. To the extent 
these authorities may apply, CCC has concluded that this rule is 
categorically excluded from further environmental review as evidenced 
by the completion of an environmental evaluation. No extraordinary 
circumstances or other unforeseeable factors exist which would require 
preparation of an environmental assessment or environmental impact 
statement. A copy of the environmental evaluation is available for 
inspection and review upon request.

Executive Order 12988

    The rule has been reviewed in accordance with Executive Order 
12988. This proposed rule preempts State laws to the extent such laws 
are inconsistent with it. This rule is not retroactive. Before judicial 
action may be brought concerning this rule, all administrative remedies 
set forth at 7 CFR Parts 11 and 780 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 of 1995

    A request for comments on the information collection needed for 
this program was part of the proposed rule. As stated above, several 
respondents commented that the proposed rule is much more complicated 
than previous cottonseed assistance programs and puts a much heavier 
administrative burden on cotton ginners, and requested that this burden 
be reduced. CCC explored options to ease the burden but all were 
determined to be fiscally irresponsible. However, CCC will assist gins 
in obtaining the data necessary and will provide time to gather data 
and to prepare applications for submission. The final information 
collection package has been approved by OMB and assigned OMB Control 
Number 0560-0256.

[[Page 4233]]

Government Paperwork Elimination Act

    CCC is committed to compliance with the Government Paperwork 
Elimination Act (GPEA) and the Freedom to E-File Act, which require 
Government agencies in general, and the FSA in particular, to provide 
the public the option of submitting information or transacting business 
electronically to the maximum extent possible. Because of the need to 
publish these regulations quickly, the forms and other information 
collection activities required to be utilized by a person subject to 
this rule are not yet fully implemented in a way that would allow the 
public to conduct business with CCC electronically. Accordingly, at 
this time, all forms required to be submitted under this rule may be 
submitted to CCC by mail or FAX.

List of Subjects in 7 CFR Part 1427

    Agriculture, Cottonseed.

0
For the reasons set out in the preamble, 7 CFR 1427 is amended as set 
forth below.

PART 1427--COTTON

0
1. The authority citation for 7 CFR part 1427 is revised to read as 
follows:

    Authority: 7 U.S.C. 7231-7239; 15 U.S.C. 714b, 714c; Pub. L. 
108-324, Pub. L. 108-447.

0
2. Revise the heading to subpart F to read as follows:

Subpart F--2004 Cottonseed Payment Program

0
3. Revise Sec.  1427.1100 to read as follows:


Sec.  1427.1100  Applicability.

    (a) Subject to the availability of funds, this subpart sets forth 
the terms and conditions under which the Commodity Credit Corporation 
(CCC) will provide payments under the cottonseed payment program for 
the 2004 crop year of cottonseed. Additional terms and conditions may 
be set forth in the application or other forms which must be executed 
to participate in the cottonseed payment program.
    (b) Payments shall be available only as provided in this subpart 
and only with respect to cottonseed in counties declared a disaster by 
the President of the United States due to hurricanes or tropical 
storms.


Sec.  1427.1102  [Amended]

0
4. In Sec.  1427.1102 remove the definitions ``Number of ginned cotton 
bales'' and ``Running bale.''
0
5. Revise Sec.  1427.1103 to read as follows:


Sec.  1427.1103  Eligible cottonseed and counties.

    To be eligible for payments under this subpart:
    (a) Counties must have been declared a disaster by the President of 
the United States due to 2004 hurricanes or tropical storms.
    (b) Cotton must not have been destroyed or damaged by fire, flood, 
or other events such that its loss or damage was compensated by other 
local, State, or Federal government or private or public insurance or 
disaster relief payments.

0
6. Amend Sec.  1427.1104 by revising the section heading, revising 
paragraph (a) and in paragraph (c) by removing the term ``low 
cottonseed prices'' and adding ``the loss of cottonseed,'' in its place 
to read as follows:


Sec.  1427.1104  Eligible applicants (first handlers).

    (a) An eligible first handler of cottonseed shall be a gin that has 
an eligible payment quantity as determined under Sec.  1427.1107. Only 
an eligible first handler of cottonseed shall be eligible to file an 
application for payment under this subpart.
* * * * *

0
7. Amend Sec.  1427.1105 by revising the section heading and paragraph 
(b) to read as follows:


Sec.  1427.1105  Payment application and deadline.

* * * * *
    (b) The application deadline shall be 60 calendar days after the 
rules in this subpart become effective unless otherwise announced by 
CCC. Applications received after such application deadline will not be 
accepted for payment.
* * * * *

0
8. Revise Sec.  1427.1106 to read as follows:


Sec.  1427.1106  Available funds.

    The total available program funds for the 2004-crop cottonseed 
program provided for in this subpart shall be $10 million.

0
9. Revise Sec.  1427.1107 to read as follows:


Sec.  1427.1107  Applicant payment quantity.

    (a) The applicant's payment quantity of cottonseed will be 
calculated by the applicant and submitted on the Cottonseed Payment 
Application and Certification for approval for by CCC. An applicant 
must be an eligible gin and the applicant's payment eligibility will be 
based on the determination of the amount of lint deliveries by cotton 
producers in eligible counties which were lost to the gin because of 
the qualifying hurricane or tropical storm as calculated under this 
section.
    (1) The lost lint determination will be made on a producer-by-
producer and farm-by-farm basis, based on producer certification, 
ginning records and other relevant information as applicable.
    (2) The loss determination will be limited to losses related to 
2004-crop cotton production in eligible counties. A cotton producer's 
gross loss of lint shall be determined based on a comparison of lint 
deliveries for 2003 and 2004 by the producer from the eligible farm to 
all gins. That difference will be adjusted to reflect changes in the 
acreage planted in the two years by the producer on the eligible farm 
and adjusted for losses due to reasons other than hurricane or tropical 
storm.
    (b) The producer will certify the gin or gins to which the lost 
lint production as so determined would have been delivered. Also, the 
producer will certify the relevant percentages of the losses that would 
have been delivered to each gin if more than one gin would have 
received the deliveries. Apportionment of the loss may be made by CCC 
between gins on that basis.
    (c) If the producer delivered 2004-crop cotton to a gin different 
than the gin to which the producer delivered 2003-crop cotton, or 
delivered cotton to more than one gin in either 2003 or 2004, the gin 
receiving 2004-crop cotton shall contact the other gins for production 
information or obtain other proof of the eligible quantity from the 
cotton producer so as to make or verify the calculation called for in 
paragraph (a) of this section.
    (d) If the cotton producer did not produce 2003-crop cotton the 
producer shall be considered a new producer. A new producer's eligible 
lost quantity will be determined as provided in paragraph (a) of this 
section except that the amount of loss of lint will be made by 
comparing the producer's actual 2004 per-acre yield with the 2003 USDA, 
National Agricultural Statistics Service county average yield for the 
applicable county.
    (e) The gin's lint eligibility will be calculated individually with 
respect to all eligible cotton producers and those individual 
eligibilities for the gin will then be added together to determine the 
total lint eligibility of the gin. From that amount of lint 
eligibility, the applicant gin's payment quantity of cottonseed shall 
be calculated by CCC by multiplying:
    (1) The applicant gin's eligible weight of lint for which payment 
is requested, as approved by CCC, and as determined

[[Page 4234]]

in paragraphs (a) through (d) of this section by;
    (2) The Olympic average of estimated pounds of cottonseed per pound 
of ginned cotton lint, as determined by CCC, for the five years 
preceding the 2004 crop year.

0
10. Revise Sec.  1427.1108 to read as follows:


Sec.  1427.1108  Total payment quantity.

    The total quantity of 2004-crop cottonseed eligible under this 
subpart shall be based on the total payment quantity of cottonseed as 
determined under this subpart for which timely applications are filed. 
Eligible cottonseed for which no application is received according to 
announced application instructions shall not be included in the total 
payment quantity of cottonseed. The total payment quantity of 
cottonseed (ton-basis) shall be calculated by multiplying:
    (a) The total weight of cotton lint, converted to tons, for which 
payment is requested by all applicants, as approved by CCC, by
    (b) The Olympic average of estimated pounds of cottonseed per pound 
of ginned cotton lint, as determined by CCC for the five years 
preceding the 2004 crop year.

0
11. Revise Sec.  1427.1109 to read as follows:


Sec.  1427.1109  Payment rate.

    The payment rate (dollars per ton) shall be determined by CCC by 
dividing the total available program funds by the total eligible 
payment quantity of cottonseed. However, in no event may the total 
payment to an eligible applicant exceed $114 per ton of cottonseed 
multiplied by the applicant's total eligible payment quantity.

0
12. Amend Sec.  1427.1111 by revising paragraph (d) to read as follows:


Sec.  1427.1111  Liability of first handler.

* * * * *
    (d) For 3 years after the date of the application for 2004-crop 
payments, the applicant shall keep records, including records 
supporting the quantity of cottonseed for which payment was requested, 
and furnish such information and reports relating to the application to 
CCC as requested. Such records shall be available at all reasonable 
times for an audit or inspection by authorized representatives of CCC, 
United States Department of Agriculture, or the Comptroller General of 
the United States. Failure to keep, or make available, such records may 
result in refund to CCC of all payments received, plus interest 
thereon, as determined by CCC. In the event of a controversy concerning 
payments, records must be kept for such longer period as may be 
specified by CCC until such controversy is resolved. Destruction of 
records at any time is at the risk of the applicant.

    Signed in Washington, DC, on January 12, 2006.
Teresa C. Lasseter,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 06-742 Filed 1-25-06; 8:45 am]
BILLING CODE 3410-05-P