[Federal Register Volume 71, Number 29 (Monday, February 13, 2006)]
[Proposed Rules]
[Pages 7445-7446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1284]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 71, No. 29 / Monday, February 13, 2006 / 
Proposed Rules  

[[Page 7445]]



DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 735

Commodity Credit Corporation

7 CFR Part 1427

RIN 0560-AH48


Regulations for the United States Warehouse Act; Cotton Loans

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Farm Service Agency (FSA) and the Commodity Credit 
Corporation (CCC) are soliciting comments and views on whether to 
revise the regulations at 7 CFR parts 735 and 1427 for the purpose of 
addressing the storage of upland cotton and its impact on loan 
eligibility.

DATES: Comments should be received on or before April 14, 2006 to be 
assured consideration.

ADDRESSES: CCC invites interested persons to submit comments on this 
proposed rule and on the collection of information. Comments may be 
submitted by any of the following methods:
     E-Mail: Send comments to [email protected].
     Fax: Submit comments by facsimile transmission to: (202) 
720-8481.
     Mail: Send comments to: Director, Price Support Division, 
Farm Service Agency, United States Department of Agriculture (USDA), 
Rm. 4095-S, 1400 Independence Avenue, SW., Washington, DC 20250-0512.
     Hand Delivery or Courier: Deliver comments to the above 
address.
     Federal Rulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    All written comments will be available for public inspection at the 
above address during business hours from 8 a.m. to 5 p.m., Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: Gene Rosera; phone: (202) 720-7901; e-
mail: [email protected]; or fax: (202) 690-3307.

SUPPLEMENTARY INFORMATION:

Background

    Traditionally, CCC has required that baled loan cotton must be 
inside approved warehouses as a condition of eligibility for a 
marketing assistance loan. When the 2004 and 2005 crops of upland 
cotton exceeded warehouse capacity in some southern-plains areas, CCC 
established requirements under which warehouses could request approval 
of short-term outside storage. For both years, approvals were granted 
under the provisions of 7 CFR 1427.1087.
    Because some localized shortages of inside storage appear likely 
for coming crops, CCC is reviewing whether its storage requirements for 
loan cotton should be revised. CCC is considering whether it should 
strictly enforce the traditional inside-storage requirement or 
establish new provisions for exempting warehouses from one or more 
storage requirements. Under traditional storage requirements, cotton 
for which inside storage is not available might not be eligible as 
collateral within the loan availability period, thus losing any 
possible storage credit and loan gain as provided under recent short-
term storage exemptions.

Issues for Public Comment

    CCC does not have any statutory authority to regulate the storage 
of non-loan cotton. With respect to amending and revising current 
regulations regarding the storage of loan cotton, CCC is soliciting 
comments regarding the need and suitability of the following regulatory 
issues, and views regarding how any suggested changes might be 
implemented.
    1. What should CCC storage requirements be with respect to upland 
loan cotton?
    2. Should CCC strictly require that all upland loan cotton be 
stored inside approved cotton warehouses without granting exemptions 
for any period under any circumstances, and if so, why?
    3. Under the Extra Long Staple (ELS) farm-stored loan program 
provided for by 7 CFR 1427.10(e) loan bales are identified to CCC by 
bale number, and any bale represented by an electronic warehouse 
receipt (EWR) is ineligible. Loans are provided based on the national 
average loan rate and any settlements are based on classification 
information established after the cotton is delivered into an approved 
warehouse. Such loans are provided in limited counties, and only at 
facilities with specialized equipment to package, store and handle the 
bales. Should CCC establish farm-stored loans for upland cotton, as 
currently available for ELS cotton, and if so, what would be 
appropriate loan eligibility requirements, storage and handling 
requirements, loan rates, settlement policies, and locational 
considerations for such a loan program? Conversely, should the ELS 
farm-stored loan provisions be eliminated to provide parity between 
programs?
    4. Should upland loan cotton stored outside be provided the same 
dollar of storage credit as provided to inside-stored loan cotton, a 
portion of the credit, or no storage credit at all, and why?
    5. Should CCC formalize a process for allowing approved cotton 
warehouses to request CCC approval for short-term use of outside yard 
storage for upland loan cotton? If so, what, if any, circumstances must 
be established by the applicant for CCC to favorably consider such 
requests, and why? Additionally, should CCC establish cutoff-dates for 
any approved outdoor storage periods, and if so, what dates are 
recommended for different production areas?
    6. If CCC allows outside storage of loan cotton during periods when 
inside-storage is unavailable, should CCC provide public notice in 
advance of approving any request for use of short-term outside storage 
for upland cotton so that interested parties may identify reasonable 
and economical alternative storage locations before any exemption is 
granted?
    7. Should USDA require that all cotton EWR's accommodate a trailer 
record indicating whether the bale has ever been stored outside, and if 
so, what information should be specifically required to be included on 
trailer record? If EWR trailer records were to contain information 
about any outside-

[[Page 7446]]

storage, who should have access to such information, and how should 
access be provided? Note that changes to the EWR and/or disclosure of 
such information may require amendments to 7 CFR part 735 or the 
Electronic Provider Agreements for cotton, or both.
    8. As a condition of loan eligibility, should loan applicants be 
required to agree that CCC may disclose such storage information to 
potential cotton buyers?
    9. If CCC provides a loan for upland cotton identified on the EWR 
as stored outside, should the loan rate be provided at the national 
average loan rate? Additionally, should the loan settlement for any 
upland loan cotton, that is stored outside and subsequently forfeited 
to CCC, be based on classification information provided by the producer 
after the cotton has been delivered to CCC inside an approved cotton 
storage warehouse? If so, should the additional costs of providing this 
classification information be paid by the producer or by CCC, and why?
    10. Non-loan upland cotton stored outside at warehouses is not 
subject to CCC storage requirements. Are there any storage and handling 
practices commonly used by warehouses for outside storage that protect 
the cotton and all interested parties and that could be adopted for 
outside stored upland loan cotton, such as double bagging? If so, are 
there geographic, marketing, or other constraints to such practices?
    11. Are there circumstances under which CCC should increase or 
decrease the weekly minimum shipping standard of 4.5 percent? If so, 
explain how CCC might administer any different standard. Is there a 
need for CCC to strengthen enforcement of the current standard, and if 
so, by what methods? Should CCC rules be changed to reflect 4.5 percent 
of total stocks rather than approved capacity?
    12. In the past, CCC has at times re-concentrated loan cotton only 
for the purpose of protecting the interest of the producer or CCC. 
Merchants having options to purchase loan cotton may benefit from re-
concentrating loan cotton for marketing efficiencies. Should CCC allow 
producers, or agents of producers, to request re-concentration of loan 
cotton for any reason? If so, would the producer/producer's agent be 
willing to pay for the charges associated with such re-concentration? 
Should they be required to pay such charges in all instances? Define 
circumstances, if any, when CCC should pay re-concentration charges.

    Signed at Washington, DC February 6, 2006.
Thomas B. Hofeller,
Acting Administrator, Farm Service Agency, and Acting Executive Vice 
President, Commodity Credit Corporation.
[FR Doc. 06-1284 Filed 2-10-06; 8:45 am]
BILLING CODE 3410-05-P