[Federal Register Volume 81, Number 110 (Wednesday, June 8, 2016)]
[Notices]
[Pages 36861-36863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13672]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation


Notice of Funds Availability (NOFA); Cotton Ginning Cost-Share 
(CGCS) Program Payments to Cotton Producers

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

ACTION: Notice.

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SUMMARY: This NOFA announces the availability of cost-share funds to 
certain cotton producers of the United States, specifically for the 
2015 cotton crop. Eligible CGCS participants will receive a one-time 
payment, calculated based on a cost-share not to exceed 40 percent of 
calculated ginning costs by region, the number of cotton acres that 
were planted, including failed acreage, for the 2015 crop year, and the 
percentage of share the participant had in the cotton. Similar to other 
Commodity Credit Corporation (CCC) programs, certain eligibility 
requirements apply, such as a $40,000 per individual or entity payment 
limit and a requirement that each participant's 3-year average adjusted 
gross income (AGI) be $900,000 or less. CGCS Program payments will be 
made to help the domestic cotton industry find new and improved ways to 
market cotton.

DATES: Application period: June 20, 2016 through August 5, 2016.

FOR FURTHER INFORMATION CONTACT: Kelly Hereth, (202) 720-0448.

SUPPLEMENTARY INFORMATION: 

Background

    U.S. upland and extra-long staple (ELS) cotton producers are 
required to gin and bale cotton before either of the components of 
cotton (lint or seed) can be marketed, as there is no commerce in un-
ginned bales. Approximately 13 million bales were ginned for the 2015 
cotton crop year. There exists, however, 2014 cotton production 
carryover (ginned cotton inventory that has not yet been sold), as well 
as the 2015 cotton crop production some which has not been marketed. 
While the payments are based on ginning costs, the intended effect of 
the CGCS Program is to aid the broader marketing chain associated with 
cotton. For example, there is a direct cost to cotton producers 
associated with ginning for improved bale packing and storage to meet 
the ever increasing quality demands of the fiber industry, and there is 
a large domestic market for the cotton seed extracted during the 
ginning process.
    The state of the market has limited the ability of cotton producers 
to expand domestic markets, develop new and additional markets, 
maintain existing markets that would have otherwise shrunk and 
marketing facilities, and increase the uses for cotton. The Commodity 
Credit Corporation Charter Act (15 U.S.C. 714c(e)) includes authority 
for CCC to use its general powers to increase the domestic consumption 
of agricultural commodities (other than tobacco) by expanding or aiding 
in the expansion of domestic markets or by developing or aiding in the 
development of new and additional markets, marketing facilities, and 
uses for such commodities.
    The ginning of cotton is necessary prior to marketing the lint for 
fiber or the seed for oil or feed; therefore CCC is using its general 
authority to aid in the expansion and maintenance of domestic markets 
for cotton. Increased domestic consumption and uses for cotton as a 
result of the CGCS Program payments to cotton producers, based on 
cotton ginning costs, will aid more than just the farmers; as the 
cotton gins, cooperatives, marketers, cottonseed crushers, and other 
marketing facilities will indirectly benefit also.
    CGCS is being done as a NOFA, as opposed to a regulation, because 
it is a one-time payment to aid expansion and creation of new markets 
for cotton. Also, CGCS is based upon 2015 cotton crop acres which are 
already known to FSA through previously submitted acreage reports. 
Accordingly, there is no benefit for public comment on CGCS.
    The Farm Service Agency (FSA) will administer the CGCS Program on 
behalf of CCC, using CCC funds.

CGCS Description

    CGCS is a one-time payment to cotton producers. CGCS will be 
available to producers of upland and extra-long staple (ELS) cotton. 
CGCS payments will be available to those cotton producers who had a 
share in the 2015 cotton acres that were planted, including failed 
cotton acreage, and reported to FSA, including landowners who had a 
share interest and risk in the cotton crop and incurred ginning costs 
for the 2015 cotton crop.
    FSA will make approximately $300 million in CGCS payments to cotton 
producers. The maximum aggregate payment amount a person or legal 
entity is eligible for under CGCS is $40,000. The funds announced in 
this NOFA are not subject to sequestration.
    Most 2015 cotton crop producers have already submitted the required 
form FSA-578, ``Report of Acreage'', to FSA, as part of their 
participation in various FSA and CCC programs. The regulation in 7 CFR 
part 718 requires producers to report for various commodities, 
including the number of cotton acres that were planted, including 
failed acres, in the United States for their 2015 cotton crop and their 
percentage share of the reported 2015 cotton crop acreage. Accordingly, 
FSA has already acquired this information as previously reported to FSA 
on a FSA-578 or a crop acreage report to their crop insurance agent 
(both reports are referred to in this NOFA as the acreage report). If 
there were any errors in the previously submitted acreage report, the 
producer may go through the established FSA process to correct the 
reported information. Any such requests for correction are subject to 
review and require approval by FSA through the established process 
before they are accepted. Because FSA already possesses 2015 cotton 
acreage report data, we know who is potentially eligible to apply for 
the CGCS Program and will mail the application to such applicants. 
Applicants may also apply through an FSA county office.

Payment Limits, Eligible Persons, and Legal Entities

    CGCS payments are limited to $40,000 per person or legal entity.
    A person or legal entity is ineligible for payments if the person's 
or legal entity's AGI for the applicable compliance program year is 
more than $900,000. If a person with an indirect interest in a legal 
entity has AGI of more than $900,000, the CGCS payments subject to AGI 
compliance provisions to the legal entity will be reduced as calculated 
based on the percent interest of the person in the legal entity 
receiving the payment. The relevant years used to calculate AGI for 
CGCS are the 2011, 2012, and 2013 tax years. As with other FSA and CCC 
programs, AGI will be calculated based on the average income for the 3 
taxable years preceding the most immediately preceding complete taxable 
year for which benefits are requested.
    In addition to having a share in cotton planted in 2015, to be 
eligible for a CGCS Program payment, each applicant is required to be a 
person or legal entity

[[Page 36862]]

who was actively engaged in farming in 2015 and otherwise eligible for 
payment, as specified in 7 CFR part 1400, and who complies with 
requirements including, but not limited to, those pertaining to highly 
erodible land conservation and wetland conservation provisions 
(commonly referred to as the conservation compliance provisions) 
specified in 7 CFR part 12.
    Foreign persons are not eligible for payments. Federal, State, and 
local governments are not eligible for CGCS payments.
    Appeal regulations specified in 7 CFR parts 11 and 780 apply. FSA 
program requirements and determinations that are not in response to, or 
result from, an individual disputable set of facts in an individual 
participant's application for assistance are not matters that can be 
appealed.
    Payment eligibility, payment limits, and AGI limits are the same 
for CGCS Program payments as they have been for other FSA and CCC 
programs, for example the Cotton Transition Assistance Program (see 7 
CFR parts 1400 and 1412).

Payment Calculation

    The CGCS payment will be calculated as follows:
acres x share x CGCS payment rate

    Acres are the number of 2015 cotton crop acres (both upland and 
ELS) in which the applicant had an interest, as reported on their 
acreage report as planted (including failed acres, but not prevented 
planted acres).
    Share is the producer's or landowner's share of such acres.
    As shown in Table 1, the CGCS payment rate is 40 percent times the 
ginning cost. The ginning cost is the calculated average cost of 
ginning per acre in the production region. The applicable production 
region is the State in which the 2015 cotton crop (upland and ELS 
cotton) was planted (not where the farm operation is located).
    There are four production regions, consistent with the U.S. cotton 
industry's longstanding designation. The per-acre regional rates are 
defined in Table 1. Cotton acreage planted in 2015 in any state not 
listed in Table 1, will receive the regional rate based on where the 
2015 cotton acres are located, as determined by the Deputy 
Administrator.

                                       Table 1--Cotton Production Regions
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                                                                                     Costs of
                Region                                   States                     ginning per    CGCS payment
                                                                                       acre          rate \1\
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Southeast.............................  Alabama, Florida, Georgia, North                 $118.60          $47.44
                                         Carolina, South Carolina, Virginia.
Mid-South.............................  Arkansas, Illinois, Kentucky, Louisiana,          140.65           56.26
                                         Missouri, Mississippi, Tennessee.
Southwest.............................  Kansas, Oklahoma, Texas.................           92.43           36.97
West..................................  Arizona, California, New Mexico.........          243.53           97.41
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\1\ The CGCS Payment Rate is 40 percent times the regional rate.

    To develop the costs in Table 1, FSA used the USDA Economic 
Research Service's calculation of cotton ginning costs, which is based 
on the Agricultural Resource Management Survey (ARMS). The data is 
based on a large survey of cotton producers in 2007 and was updated 
through 2014 using several indices that reflect annual changes in 
ginning costs. The per planted acre ginning costs were converted to 
regional averages weighted by each State's share of regional plantings 
during the most recent 5 years. In the ARMS data, no distinction is 
made between ginning costs for upland and ELS cotton, so the same rate 
will be applied to both varieties of cotton.
    For example, an applicant has 1,000 acres of upland cotton located 
in Texas and 500 acres of ELS cotton in New Mexico, and the applicant 
has 100 percent interest in all of the cotton reported for 2015 for the 
farm. Even though the farm operation is located in Texas, the 
applicable CGCS payment rate is based on where the cotton is planted. 
Therefore, for the acres located in Texas the CGCS payment rate is 
$36.97, and for the cotton acreage located in New Mexico, the CGCS 
payment rate is $97.41 (as shown in Table 1). Therefore, the result of 
the CGCS calculation would be $85,675 ((1,000 cotton acres in Texas x 
$36.97 per acre x 100 percent share) + (500 acres in New Mexico x 
$97.41 x 100 percent share)), but the CGCS payment to this applicant 
would be reduced to $40,000 because the CGCS payment limit is $40,000 
per person or legal entity.

Application and Eligible Applicants

    To apply for the CGCS Program, each applicant must submit a 
complete and valid CGCS application (CCC-882 form) to their recording 
FSA county office either in person, by mail, or by electronic means, 
including email and facsimile. The application period is from June 20, 
2016, through August 5, 2016. CGCS applications must be received by FSA 
by August 5, 2016. Applicants may revise their application and re-
submit it to FSA during the application period; the revised CGCS 
application must be received by FSA by August 5, 2016. Any application 
received by FSA after August 5, 2016, will not be considered and will 
be ineligible for any CGCS payment. The application must include, but 
is not limited to, the number of 2015 planted acres of cotton (upland 
and ELS cotton) on the farm, the farm serial number, and tract number 
of the farm where the cotton acreage was reported. The applicant will 
be required to submit evidence upon request, such as seed receipts, 
custom harvesting receipts, or bale gin lists, to substantiate either 
the claimed share interest in the cotton or the number of cotton acres 
reported for the 2015 crop year.
    In order to be eligible for CGCS, applicants are required to have 
reported their 2015 crop year planted cotton, including failed acreage, 
to FSA using the FSA-578 acreage report. Only the number of cotton 
acres reported on the FSA-578 acreage report, and the producer's share 
in the planted, including failed, cotton acreage for the 2015 crop year 
will be eligible for consideration for a CGCS payment. In the event 
that there are determined acres of planted, including failed, cotton 
(upland and ELS cotton) crop acreage for 2015, as verified by FSA in 
carrying out acreage reporting compliance activities, then determined 
acres will be used in place of the reported acres. (Standard FSA 
acreage report compliance activities include verifying the number of 
reported acres; the results are referred to as ``determined acres.'')
    The applicant's share interest in cotton acres on a CGCS 
application cannot be greater than the share interest in cotton acres 
as reported on the

[[Page 36863]]

acreage report. FSA will verify and confirm the applicant's share 
interest in cotton acres reported on the CGCS application by comparing 
it to the applicant's share interest in the cropland as reported on 
that farm's acreage report for the 2015 crop year. For example, if a 
farm has 50 acres of cotton and two producers report equal shares of 
the 50 acres of cotton, each must each have a 100 percent share 
interest in at least 25 cotton acres (or 50 percent share in the 50 
reported cotton acres) reported on the farm acreage report for the 2015 
crop year to support their reported share of cotton acres on that farm.
    If an eligible applicant has sold or leased a farm that produced 
cotton in 2015, the applicant may assign the CGCS payment by completing 
form CCC-36. However, under no circumstances will CCC pay both the 2015 
producer and the 2016 producer of such cotton.
    As noted above, if there are any corrections required for acreage 
reports, they may be made, however corrections related to upland or ELS 
cotton acres or shares must be received by FSA by August 5, 2016, the 
CGCS Program application deadline in order to be used to calculate the 
CGCS payment. Any correction to 2015 cotton crop acres made to the 
acreage report after August 5, 2016, is not eligible to be considered 
for CGCS.

Process for Evaluation of CGCS Applications and Approval of Payments

    FSA will review each CCC-882 application to determine eligibility 
by verifying that the application is complete and the number of cotton 
acres the applicant certified on the application for the 2015 crop year 
is the same as reported on the FSA-578 acreage report.
    When there are multiple eligible applicants for a farm, FSA will 
approve an application for the CGCS Program and approve the division of 
payment when all the following, as applicable, occur or have been 
determined to have occurred:
    (1) Each landlord, tenant, and sharecropper that apply sign their 
own CGCS Program application, and their combined payment shares 
recorded on the application when added together cannot exceed 100 
percent of the shares recorded on the acreage report for the 2015 
cotton crop for the farm, and neither the landlord, tenant, nor 
sharecropper can receive 100 percent of CGCS payment for the farm;
    (2) CCC determines that the interests of tenants and sharecroppers 
are being protected by confirming the shares are consistent with the 
acreage report;
    (3) The applicant, upon the FSA county office committee's request, 
if necessary, will provide a copy of the lease agreement; and
    (4) CCC determines that the payment shares do not circumvent either 
the provisions of this NOFA or the provisions of 7 CFR part 1400.
    The result of an approved application will be a one-time payment, 
consistent with the terms specified in this NOFA and the payment 
application. All applications are subject to the approval by FSA on 
behalf of CCC, and FSA will not approve ineligible applications.

Provisions Requiring Refund to FSA

    In the event that any application for a CGCS payment resulted from 
erroneous information or a miscalculation, the payment will be 
recalculated and the participant must refund any excess to FSA with 
interest to be calculated from the date of the disbursement to the 
participant. If for whatever reason FSA determines that the applicant 
misrepresented either the acreage or share of cotton acreage or both, 
or if the CGCS payment would exceed the participant's payment based 
upon correct acreage and share, the application will be disapproved and 
the full CGCS payment for that crop and participant will be required to 
be refunded to FSA with interest from date of disbursement. If any 
corrections to the 2015 cotton crop acres or shares are made to the 
acreage report after August 5, 2016, and would have resulted in a lower 
CGCS payment, the applicant will be required to refund the difference 
with interest from date of disbursement.
    The liability of anyone for any penalty or sanction resulting from 
a CGCS application, or for any refund to FSA or related charge is in 
addition to any other liability of such person under any civil or 
criminal fraud statute or any other provision of law including, but not 
limited to: 18 U.S.C. 286, 287, 371, 641, 651, 1001, and 1014; 15 
U.S.C. 714; and 31 U.S.C. 3729.

Paperwork Reduction Act Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), OMB approved an emergency information collection request 
on CGCS so FSA can begin the application period upon publication of 
this NOFA.

Environmental Review

    Because this is a one-time payment, there are no impacts to the 
human environment as defined by NEPA and, as such, no Environmental 
Assessment or Environmental Impact Statement will be prepared.

Val Dolcini,
Administrator, Farm Service Agency, and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 2016-13672 Filed 6-7-16; 8:45 am]
BILLING CODE 3410-05-P