[Federal Register Volume 80, Number 204 (Thursday, October 22, 2015)]
[Rules and Regulations]
[Pages 63889-63890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26953]



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  Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / 
Rules and Regulations  

[[Page 63889]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 27

[Doc. #AMS-CN-14-0050]
RIN 0581-AD38


Defining Bona Fide Cotton Spot Markets for the World Cotton 
Futures Contract

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Agricultural Marketing Service (AMS) is amending the 
regulatory language to designate which bona fide cotton spot markets 
will be used to determine actual commercial differences in value for 
various grades above or below the basis grade in the settlement of 
World cotton futures contracts on the Intercontinental Exchange (ICE). 
Designating bona fide cotton spot markets for the World cotton futures 
contract in the regulatory language will allow for AMS to collect spot 
market price data and publish spot quotes for the settlement of these 
specific contracts.

DATES: Effective Date: November 23, 2015.

FOR FURTHER INFORMATION CONTACT: Darryl Earnest, Deputy Administrator, 
Cotton & Tobacco Program, AMS, USDA, 3275 Appling Road, Room 11, 
Memphis, TN 38133. Telephone (901) 384-3060, facsimile (901) 384-3021, 
or email [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to access all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health, and safety effects, distributive impacts and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This action has been designated as a ``non-significant regulatory 
action'' under section 3(f) of Executive Order 12866 and therefore has 
not been reviewed by the Office of Management and Budget (OMB).

Executive Order 13175

    This action has been reviewed in accordance with the requirements 
of Executive Order 13175, Consultation and Coordination with Indian 
Tribal Governments. The review reveals that this regulation would not 
have substantial and direct effects on Tribal governments and would not 
have significant Tribal implications.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
There are no administrative procedures that must be exhausted prior to 
any judicial challenge to the provisions of this rule.

Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this action on small entities and has determined that its 
implementation will not have a significant economic impact on a 
substantial number of small businesses.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. There are approximately sixty cotton 
merchant organizations of various sizes active in trading U.S. cotton. 
Many of these cotton merchants are small businesses under the criteria 
established by the Small Business Administration (13 CFR 121.201). 
Small business entities that are merchants in the U.S. cotton industry 
are defined as having fewer than 100 employees. Amendments to the 
regulation concerning bona fide cotton spot market designations will 
not significantly affect small businesses as defined in the RFA 
because:
    (1) How spot prices are estimated are not expected to be impacted 
by this action;
    (2) Business practices of the U.S. cotton industry are not expected 
to change as a result of this action;
    (3) Costs associated with providing market news services will not 
be significantly changed by this action;
    (4) Market news services are paid for by appropriated funds, 
therefore users are not charged fees for the provision of the services.

Paperwork Reduction Act

    In compliance with OMB regulations (5 CFR part 1320), which 
implement the Paperwork Reduction Act (PRA) (44 U.S.C. 3501), the 
information collection requirements contained in the provisions to be 
amended by this proposed rule have been previously approved by OMB and 
were assigned OMB control number 0581-0009, Cotton Classification and 
Market News Service.

Background

    The Secretary of Agriculture is authorized under the United States 
Cotton Futures Act (7 U.S.C. 15b) to designate at least five bona fide 
cotton spot markets from which cotton price information can be 
collected. A spot market--also called the ``cash market'' or ``physical 
market''--is a market where commodities are sold on the spot for cash 
at current market prices and delivered immediately. Designation of 
these bona fide cotton spot markets and the determination of which 
counties and states compose each of these spot markets was most 
recently published in the Federal Register on April 30, 2013 (78 FR 
25181). For each of these bona fide cotton spot markets, the Cotton and 
Tobacco Program of the Agricultural Marketing Service collects market 
price information under the United States Cotton Futures Act (7 U.S.C. 
15b), the Cotton Statistics and Estimates Act (7 U.S.C. 473b) and the 
Agricultural Marketing Act of 1946 (7 U.S.C. 1622(g)). This price 
information is then used to calculate price differences for the 
settlement of cotton futures contracts.
    In order to better manage price risk in the global cotton market, 
the American Cotton Shippers Association (ACSA) and the International 
Cotton Association (ICA) requested that the Intercontinental Exchange 
(ICE) offer a World cotton futures contract. In response, ICE

[[Page 63890]]

announced its intention to begin offering World cotton contracts 
beginning in the fourth quarter of 2015. To determine actual commercial 
differences in value for various grades above or below the basis grade 
in the settlement of this new World cotton futures contract, AMS was 
asked by these same stakeholders to collect and publish cotton spot 
market price information relevant to the World cotton contract. 
Therefore, AMS is amending Sec.  27.94 to designate the same bona fide 
cotton spot markets for the World cotton futures contract as have been 
designated for the No. 2 cotton futures contract.

Summary of Comments

    A proposed rule was published in the Federal Register on December 
16, 2014, with a comment period of December 16, 2014 through January 
16, 2015 (79 FR 74654). No comments were received by AMS.
    The U.S. cotton industry and ICE requested that AMS, Cotton and 
Tobacco Program to collect and publish cotton spot market price 
information relevant to the World cotton contract prior to the offering 
of this new futures contract, which is scheduled for the fourth quarter 
of 2015.

List of Subjects in 7 CFR Part 27

    Commodity futures, Cotton.

    For the reasons set forth in the preamble, 7 CFR part 27 is amended 
as follows:

PART 27--[Amended]

0
1. The authority citation for 7 CFR part 27 continues to read as 
follows:

    Authority: 7 U.S.C. 15b, 7 U.S.C. 473b, 7 U.S.C. 1622(g).


0
2. In Sec.  27.94, paragraph (a) is revised to read as follows:


Sec.  27.94  Spot markets for contract settlement purposes.

* * * * *
    (a) For cotton delivered in settlement of any Cotton No. 2 or World 
Cotton contract on the Intercontinental Exchange (ICE); the spot 
markets are Southeastern, North and South Delta, Eastern Texas and 
Oklahoma, West Texas, and Desert Southwest.
* * * * *

    Dated: October 19, 2015.
Rex A. Barnes,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2015-26953 Filed 10-21-15; 8:45 am]
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