[Federal Register Volume 71, Number 218 (Monday, November 13, 2006)]
[Proposed Rules]
[Pages 66142-66143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19076]


 ========================================================================
 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. 218 / Monday, November 13, 2006 / 
Proposed Rules  

[[Page 66142]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1435

RIN 0560-AH50


Reassignment of Sugar Allocation Shortfalls

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Commodity Credit Corporation (CCC) proposes to clarify 
Sugar Program regulations for the sugar marketing allotment program. 
This rule proposes to clarify eligibility requirements for processors 
to receive reassigned sugar marketing allocations deducted from other 
processors with insufficient supply to fill their allocations. The 
intent of this rule is to elaborate upon CCC's broad discretion to 
conduct allocation reassignments in the current regulations.

DATES: Comments on this rule must be submitted by January 12, 2007 to 
be assured consideration.

ADDRESSES: The Farm Service Agency (FSA) invites interested persons to 
submit comments on this proposed rule. Comments may be submitted by any 
of the following methods:
    E-mail: Send comments to [email protected].
    Mail: Submit comments to: Director, Dairy and Sweeteners Analysis 
Group (DSAG), FSA, United States Department of Agriculture (USDA), STOP 
0516, 1400 Independence Avenue, SW., Washington, DC 20250-0516.
    Fax: Submit comments by facsimile transmission to (202) 690-1480.
    Hand Delivery or Courier: Deliver comments to the above address.
    Federal eRulemaking Portal: Go to http://www.regulations.gov. 
Follow the online instructions for submitting comments.
    Comments may be inspected in the Office of the Director, DSAG, FSA, 
USDA, Room 3752-S South Building, Washington, DC, between 8 a.m. and 
4:30 p.m. Monday through Friday, except holidays. A copy of this 
proposed rule is available on the DSAG Web site at http://www.fsa.usda.gov/ao/epas/dsa.htm.

FOR FURTHER INFORMATION CONTACT: Barbara Fecso at (202) 720-4146, or 
via e-mail at [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:

Background

    The Sugar Program is authorized by section 359 of the Agricultural 
Adjustment Act of 1938, as amended by the Farm Security and Rural 
Investment Act of 2002 (``2002 Act'') (7 U.S.C. 1359aa et seq.). The 
2002 Act requires CCC to periodically analyze market factors and 
establish a national sugar marketing allotment to limit the quantity of 
sugar that processors can market. The goal is to achieve a price level 
that will minimize sugar loan collateral forfeitures to CCC. Once the 
overall marketing allotment is established, it is allocated between the 
beet sugar and cane sugar sectors (54.35 and 45.65 percent, 
respectively). The beet sugar allotment is allocated directly to beet 
processors, while the cane sugar allotment is allocated to four cane-
producing states (Florida, Louisiana, Hawaii and Texas). The cane 
allotment is further allocated among sugar cane processing companies 
within each state.
    This rule proposes to alter 7 CFR 1435.309(b) regarding 
reassignment of allocations among processors. Section 359e(a) of the 
2002 Act requires CCC to periodically determine if processors have 
sufficient supplies to fill their allocations. If CCC determines that a 
processor has insufficient supply, the CCC is required to redistribute 
the surplus allocation among the processors that can use it. A major 
distinction between initial allocations and reassignments is that CCC 
has no discretion in determining a company's initial allocation. 
However, CCC, based on its analysis of current market and processor 
conditions, determines which processors receive the reassigned 
allocation. This rule proposes to emphasize CCC discretion to deduct 
allocation from companies and reassign it to other companies by adding 
a clarifying sentence in 7 CFR 1435.309(b) to affirm that such 
reassignments, as they always have been, are based on CCC's 
determination of market and processor needs.
    This rule will correct a situation where reassignment, contrary to 
its objective, fails to add sugar to the market in the current year and 
increases the sugar supply beyond the allotment in the following year. 
For example, on August 19, 2005, to release more sugar into the 
marketplace, CCC increased the Overall Allotment Quantity (OAQ) by 
250,000 tons. At that time, CCC and the sugar industry recognized that 
there would be transportation and other difficulties in delivering the 
extra sugar into the marketplace. Given the extreme tightness in the 
sugar market at that time, CCC wanted to avoid reassigning allotment to 
processors that would merely transfer title of their new reassigned 
allocation and not actually deliver the sugar until Fiscal Year 2006. 
It is common for beet sugar processors, with allocation available at 
the end of the fiscal year, to fill their allocation by transferring 
title to stocks that will be delivered to users at the beginning of the 
following fiscal year.
    When CCC found that a beet processor had 25,000 tons of allocation 
that it could not fill due to a production shortfall in August and 
September 2005, the agency exercised its discretion to reassign this 
quantity to companies with the greatest capacity to physically deliver 
the portion of the deficit assigned to it. CCC surveyed beet processors 
with extensive sugar supply to determine if these companies could 
physically deliver the sugar in fiscal year 2005. Several companies 
could not deliver all their supply and CCC reduced their portion of the 
reassignment accordingly.
    Also, for this reassignment of 25,000 tons in 2005, CCC established 
a fiscal year carryover threshold level at which it was decided that a 
processor would not be given a share of the reassignment. CCC decided 
that a processor with more than an estimated 8 percent fiscal year 2005 
carryover would not receive any of the 25,000 tons being reassigned. 
The 8 percent carryover cut-off was used because processors have 
indicated that they prefer to hold at least a month's supply of sugar, 
or 8 percent of a year's supply, to meet the next month's

[[Page 66143]]

delivery demands. The presumption is that a company will deliver sugar, 
from an increase in its allocation, into the marketplace in September 
only if its ending stocks are greater than its October commitments. 
Thus, it follows that a processor with 8 percent or more of a year's 
allocation on hand did not need any portion of the reassignment being 
distributed by CCC in that month.
    The carryover limitation had not been used for reassignments prior 
to this action in 2005. Subsequently, some industry participants 
disagreed with the CCC determination and suggested that the agency 
solicit public comment on the reassignment process. For this rule, CCC 
considered proposing specific eligibility guidelines, such as using a 
historic date range in an explicit formula, to calculate reassignments. 
However, because of the constant state of flux in the domestic sugar 
market, this rule proposes reassignment eligibility rules that maintain 
the flexibility for CCC to adapt to market changes as necessary.

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.

Regulatory Flexibility Act

    The requirements of the Regulatory Flexibility Act (5 U.S.C. 601-
602) do not apply to this rule because CCC is not required to publish a 
notice of proposed rulemaking for the subject of this rule. 
Nonetheless, CCC has determined that this rule will not have a 
significant economic impact on a substantial number of small entities 
and a Regulatory Flexibility Analysis was not performed.

Environmental Assessment

    The environmental impacts of this rule have been considered 
consistent with 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 through 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 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. In accordance with this Executive Order: 
(1) All State and local laws and regulations that are in conflict with 
this rule will be preempted; (2) no retroactive effect will be given to 
this rule; and (3) administrative proceedings in accordance with 7 CFR 
part 11 must be exhausted before seeking judicial review.

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 Reform Act of 1995

    This rule contains no Federal mandates, as defined under title II 
of the 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 UMRA.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Paperwork Reduction Act

    Under 7 U.S.C. 7991(c)(2)(A) these regulations may be promulgated 
and the program 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 (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 nature of 
the forms and other information collection activities required for this 
program, they are not fully implemented in a way that would allow the 
public to conduct business with CCC electronically. Accordingly, at 
this time, all forms and information required to be submitted under 
this rule may be submitted to CCC by mail or FAX.

E-Government Act Compliance

    CCC is committed to complying with the E-Government Act, 44 U.S.C. 
3501, note, to promote the use of the Internet and other information 
technologies to provide increased opportunities for citizen access to 
Government information and services, and for other purposes. For 
information pertinent to E-GOV compliance related to this rule, please 
contact the person named above under the information contact section.

List of Subjects in 7 CFR Part 1435

    Agricultural commodities, Loan programs--agriculture, Marketing 
quotas, Price support programs, Sugar.
    Accordingly, 7 CFR part 1435 is proposed to be amended as follows:

PART 1435--SUGAR PROGRAM

    1. The authority citation for 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 D--Flexible Marketing Allotments for Sugar

    2. In Sec.  1435.309, paragraph (b) is revised to read as follows:


Sec.  1435.309  Reassignment of deficits.

* * * * *
    (b) Sugar beet and sugar cane processors will report to CCC current 
inventories, estimated production, expected marketings, transportation 
restrictions, and any other pertinent factors CCC deems appropriate to 
determine a processor's ability to market and deliver their allocation. 
Reassignment decisions are made at the discretion of CCC based on the 
determination of CCC of sugar market and processor needs.
* * * * *

    Signed in Washington, DC, on October 25, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
 [FR Doc. E6-19076 Filed 11-9-06; 8:45 am]
BILLING CODE 3410-05-P