[Federal Register Volume 83, Number 46 (Thursday, March 8, 2018)]
[Notices]
[Pages 9825-9828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04693]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

Farm Service Agency


Notice of Funds Availability (NOFA); Cotton Ginning Cost-Share 
Program (CGCS) 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 
2016 cotton crop. Eligible CGCS participants will receive a one-time 
payment, calculated based on a cost-share not to exceed 20 percent of 
calculated ginning costs by region, the number of cotton acres that 
were planted, including failed acreage, for the 2016 crop year, and the 
percentage of share the participant had in such 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 payments will be made to 
help the domestic cotton industry find new and improved ways to market 
cotton.

DATES: Application period: March 12, 2018, through May 11, 2018.

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 17 million bales of cotton in the United 
States were ginned for the 2016 cotton crop year. There exists, 
however, 2016 cotton production carryover (ginned cotton inventory that 
has not yet been sold) of 2.75 million bales at the end of the 2016 
marketing year (July 31, 2017). Additionally, the 2017 cotton crop 
production is projected to exceed 21 million bales (a production 
increase of 23 percent over crop year 2016), the majority of which has 
not been marketed. While the payments under

[[Page 9826]]

CGCS are based on ginning costs, the intended effect of CGCS 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 U.S. cotton 
producers to expand domestic markets, develop new and additional 
markets, maintain existing markets and marketing facilities, and 
increase the uses for cotton. The CCC 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 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 based on the 2016 cotton crop to aid expansion 
and creation of new markets for cotton. The Farm Service Agency (FSA) 
has designed CGCS to have a simplified, streamlined application process 
in order to provide assistance as quickly as possible to cotton 
producers by using 2016 cotton crop acres, which are already known to 
FSA through previously submitted acreage reports. CGCS does not affect 
the ability to submit, or allow a producer or owner to submit, 
additional or revised acreage reports for 2016. Accordingly, there is 
no benefit for public comment on CGCS.
    FSA will administer CGCS on behalf of CCC, using CCC funds.

CGCS Description

    CGCS is a one-time payment to cotton producers based on the 2016 
cotton crop already on file with the agency. CGCS will be available to 
producers of upland and ELS cotton. CGCS payments will be available to 
those cotton producers who had a share in the 2016 cotton acres that 
were planted, including failed cotton acreage, and reported to FSA. 
Landowners who had a share interest, share in the cotton crop, and 
incurred ginning costs for the 2016 cotton crop are considered eligible 
for the 2016 CGCS, provided all other eligibility requirements are met.
    Based on 2016 acreage reports and the CGCS payment rates 
established by this NOFA, FSA will make approximately $220 million in 
CGCS payments to eligible 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.
    All 2016 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 to FSA their acreage for various 
commodities, including the number of cotton acres that were planted, 
including failed acres, but not prevented planted acres, in the United 
States for their 2016 cotton crop and their percentage share of the 
reported 2016 cotton crop acreage. Accordingly, FSA has already 
acquired this information relevant to the operation of CGCS 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 2016 cotton acreage report and producer share data, FSA knows 
who is potentially eligible to apply for CGCS, and FSA will mail pre-
filled applications to such applicants. Applicants may also apply 
through a 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 
2016 CGCS are the 2012, 2013, and 2014 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 2016, to be 
eligible for a CGCS payment, each applicant is required to be a person 
or legal entity who was actively engaged in farming in 2016 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 Calculation

    The CGCS payment will be calculated as follows:

Acres x share x CGCS payment rate

    Acres are the number of 2016 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 20 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 includes several States in which the 2016 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 2016 in any state not 
listed in Table 1, will receive the regional rate based on where the 
2016 cotton acres are located,

[[Page 9827]]

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,                 $116.05          $23.21
                         Florida,
                         Georgia, North
                         Carolina, South
                         Carolina,
                         Virginia.
Mid-South.............  Arkansas,                 151.97           30.39
                         Illinois,
                         Kentucky,
                         Louisiana,
                         Missouri,
                         Mississippi,
                         Tennessee.
Southwest.............  Kansas,                    98.26           19.65
                         Oklahoma, Texas.
West..................  Arizona,                  240.11           48.02
                         California, New
                         Mexico.
------------------------------------------------------------------------
\1\ The CGCS payment rate is 20 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 2015 and was 
updated through 2016 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 (2012-2016). In the ARMS data, no 
distinction is made between ginning costs for upland and ELS cotton, 
therefore 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 1,000 acres of ELS cotton in New Mexico, and the applicant 
has 100 percent interest in all of the cotton reported for 2016 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 
$19.65, and for the cotton acreage located in New Mexico, the CGCS 
payment rate is $48.02 (as shown in Table 1). Therefore, the result of 
the CGCS calculation would be $67,670 ((1,000 cotton acres in Texas x 
$19.65 per acre x 100 percent share) + (1,000 acres in New Mexico x 
$48.02 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 CGCS, each applicant must submit a complete 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 March 12, 2018, through May 
11, 2018. CGCS applications must be received by FSA by May 11, 2018, in 
order to be eligible for a CGCS payment. Applicants may revise their 
application and re-submit it to FSA during the application period; 
however, the revised CGCS application must be received by FSA by May 
11, 2018. Any application received by FSA after May 11, 2018, will 
neither be processed nor considered and will be ineligible for any CGCS 
payment. FSA will pre-fill the application, which will include, but is 
not limited to, the number of 2016 planted acres, including failed 
acres, of cotton (upland and ELS cotton) on the farm as previously 
reported by the producer on form FSA-578, the farm serial number, and 
tract number of the farm where the cotton acreage was reported as of 
March 8, 2018. The applicant will be required to sign and date the pre-
filled form. If FSA decides it is necessary to confirm the applicant's 
share interest in the 2016 cotton crop, 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 2016 crop year.
    In order to be eligible for CGCS, applicants are required to have 
reported their 2016 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 2016 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 2016, as verified by FSA in 
carrying out acreage reporting compliance activities, then determined 
acres will be used in place of the reported acres from the acreage 
report. (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 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 
cotton as reported on that farm's acreage report for the 2016 crop 
year. For example, if a farm has 50 acres of cotton and the acreage was 
reported with two producers each having an equal 50 percent share 
interest in those reported acres of cotton, each producer can file a 
CGCS application for 50 acres of cotton with a 50 percent share.
    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 May 11, 2018, the 
CGCS application deadline, in order for any corrected acreage to be 
used to calculate the CGCS payment. Any correction to 2016 cotton crop 
acres made to the acreage report after May 11, 2018, 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 2016 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 each application that is filed for the CGCS when all the 
following, as applicable, occur or have been determined to have 
occurred:
    (1) The landlord, tenant, and sharecropper have signed and 
submitted their own CGCS application not to

[[Page 9828]]

exceed their reported share interest in cotton acres on the farm;
    (2) CCC confirms the shares are consistent with the acreage report 
to protect the interests of tenants and sharecroppers and at no time 
will payments be issued for total shares exceeding 100 percent of the 
total cotton acres reported on the farm, and where lease agreements 
exist under which terms are determined to be a share lease, according 
to 7 CFR part 1412, for cotton, neither the landlord, tenant, nor 
sharecropper will receive 100 percent of CGCS payment for the farm;
    (3) If determined necessary and requested by the FSA county office 
committee, the applicant provided 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 CGCS 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 payment 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 the date of disbursement. If any 
corrections to the 2016 cotton crop acres or shares are made to the 
acreage report 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 for 6 months under OMB control number of 0560-0287 so FSA can 
begin the application period upon publication of this NOFA.

Environmental Review

    Because this is a one-time payment for commodities that is not 
connected to the management of existing operations (consistent with 7 
CFR 799.31(b)(6)(iii)), there are no measurable individual or 
cumulative impacts to the human environment, as defined by the National 
Environmental Policy Act and, as such, no Environmental Assessment or 
Environmental Impact Statement will be prepared. Consistent with the 
nature and anticipated impacts of this action, this NOFA serves as 
documentation of the programmatic environmental compliance decision for 
this federal action.

Federal Assistance Programs

    The title and number of the Federal assistance programs, as found 
in the Catalog of Federal Domestic Assistance, to which this NOFA 
applies is:

10.118 Cotton Ginning Cost Share Program.

Steven J. Peterson,
Administrator, Farm Service Agency, and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 2018-04693 Filed 3-7-18; 8:45 am]
 BILLING CODE 3410-05-P