Cottonseed Payment Program

AGENCIES:

Commodity Credit Corporation, USDA.

ACTION:

Final rule.

SUMMARY:

This final rule codifies portions of the Military Construction Appropriations and Emergency Hurricane Supplemental Appropriations Act, 2005, enacted on October 13, 2004 Public Law 108-324 (“2004 Act”) to provide assistance to producers and first-handlers of the 2004 crop of cottonseed in counties declared a disaster by the President of the United States due to 2004 hurricanes and tropical storms. Other 2004 Act disaster provisions for other crops were implemented under separate rules.

DATES:

This rule is effective January 26, 2006.

FOR FURTHER INFORMATION CONTACT:

Chris Kyer, phone: (202) 720-7935; e-mail: chris.kyer@wdc.usda.gov.

SUPPLEMENTARY INFORMATION:

Discussion of Final Rule

In a proposed rule published in the Federal Register at 70 FR 36536 (June 24, 2005), the Commodity Credit Corporation (CCC) proposed regulations for administering the 2004 Cottonseed Payment Program authorized by Division B, Section 104 of the 2004 Act (Pub. L. 108-324). The 2004 Act requires CCC to provide assistance to producers and first-handlers (cotton gins) of the 2004 crop of cottonseed in counties declared a disaster by the President of the United States due to hurricanes and appropriated $10 million for these payments. As amended, by Section 789 of Division A of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447), Section 104 provides:

The Secretary of Agriculture shall use $10,000,000 to provide assistance to producers and first handlers of the 2004 crop of cottonseed located in counties declared a disaster by the President of the United States in 2004 due to hurricanes or tropical storms.

The proposed rule described how the program was last administered for the 2002 crop year and how the 2004 program will be operated differently from the 2002 program. To summarize, the 2002 program used 2002 crop year production as a basis for payment because all gins in the nation were eligible and the intent of the program was to offset the effect on producers of low cottonseed prices. However, because the 2004 program is tied to legislation that involves hurricanes and tropical storms, the agency's intent with the 2004 Cottonseed Payment Program was to base payments on a loss of cotton lint (to be converted to a cottonseed equivalent), not actual lint production. Therefore, the rule proposed that the applicant's quantity for payment will be calculated by a gin by comparing each of their eligible producer's 2003 lint production to their 2004 lint production and adjusting the difference to reflect changes in planted acreages between the two years. The gin would then add up their producer's losses to arrive at a total quantity for which to request payment. The rule also provided for situations where the cotton producer did not produce 2003 cotton or when the producer may have delivered 2004 cotton to a different gin than for 2003. Other key provisions of the rule provided regulations for eligible cottonseed, eligible applicants, available funds, agency calculation of the total payment quantity, determining the payment rate, and liability of first handler.

Comments and Changes to Final Rule

The 30-day comment period for the proposed rule closed on July 25, 2005. FSA received comments from 28 entities or persons which included 4 cotton associations, 2 gins, 10 United States Senators, and 10 Congressmen. In general, the respondents consistently expressed concerns about how the proposed rule will place administrative burden on gins, particularly at a time when cotton is being harvested and ginned, and recommended that USDA identify a more efficient and less burdensome way to deliver the program. However, two cotton associations conceded that while the proposed rule is much more complicated than previous cottonseed assistance programs and puts a much heavier administrative burden on cotton ginners, it does seem to be the most equitable way to distribute assistance to producers who suffered production losses.

Specifically, the letters from 10 Senators and Congressmen cited the additional administrative burden placed upon gins by the proposed rule but did not offer alternative recommendations. One ginner expressed concern about the administrative burden, plus the potential for conflict created by the proposed rule between the gin and the producer where the gin cannot control the outcome of the rules but is blamed for the results nonetheless. Another ginner specifically recommended a distribution of assistance based on 2003 crop year lint production which would be more equitable and less burdensome to producers and ginners. Two associations stated that cotton ginners are willing to gather data from producers but suggested an extended application time of 45 to 60 days. These two associations also suggested use of a standard form that producers can use to provide production and acreage data to their gins that also provides a certification by producers that they are responsible for the accuracy of the data on the form. Two additional associations submitted similar recommendations and suggested the use of a form by producers with a self-certification clause that would shift liability from gins to producers, an application period of at least 45 days, clarification of provisions regarding producers who did not plant cotton in either 2003 or 2004, and the use of a lint-to-cottonseed conversion factor based on the national average as in past programs. Further, these associations requested that all gins in states with eligible disaster counties receive disaster application information and the eligible county list.

More specific comments are discussed below section by section, along with minor changes that will be made in the final rule.

Section 1427.1100 Applicability

Three cotton associations suggested that gins in states with disaster-declared counties should receive application information and an eligible county list in order to account for all eligible production. While there was no recommendation as to how to carry out the suggestion, CCC agrees that program information must be easily available and will, therefore, make the instructions, forms and list of eligible counties available to gins electronically on the internet or by electronic mail. This provision will be handled administratively. Therefore, the section is adopted as proposed.

Section 1427.1105 Payment Application and Deadline

Four associations stated that in order to administer the program as USDA proposes they will need additional time to gather data from producers, perform necessary calculations and prepare applications to CCC. One association suggested an application deadline of 45 to 60 days, and three associations suggested at least 45 days. CCC agrees that additional time may be necessary for gins to gather data from producers that are not currently on file, to compile such data, and prepare an application. Thus, the final rule provides that gins have 60 calendar days from the date the program is announced in the Federal Register to file applications with CCC.

Section 1427.1107 Applicant Payment Quantity

All of the respondents cited the additional burden the proposed rule would place on gins as compared to previous Cottonseed Payment Programs. Specifically, the proposed rule provided that gins must differentiate production from producers located in eligible and non-eligible counties, gather data from producers or other gins if a producer ginned cotton at a different gin in 2003, calculate expected production for new producers who did not produce cotton in 2003, and calculate lint production losses for each producer based on 2003 and 2004 production, adjusting such losses for differences in acreage between the two years. This required gins to gather from producers data not already on file such as planted acreages and data for producers new to the gin. CCC recognizes that, compared to past programs, gins will be required to perform additional work and thoroughly explored other options to ease the burden, such as simply using 2003 production as a basis for payment or comparing 2003 production to 2004 production without considering the difference in acreages between the two years. After consideration, both options were determined to be fiscally irresponsible ways to operate a disaster-related program. Therefore, the section will be adopted as proposed. However, CCC will make every effort to assist gins in obtaining the data necessary that they do not currently have on file and will provide additional time for the gins to gather data and to prepare applications for submission to CCC.

Section 1427.1108 Total Payment Quantity

Two associations recommended that the eligible quantity of cottonseed for payment be determined using a conversion factor based on the national average and cited the national average seed-to-lint ratio as used for past programs. CCC did propose a different formula for computing the seed-to-lint ratio from what was done in the past, except for using the five years preceding 2004. Thus, CCC adopts § 1427.1108(b) as proposed.

Section 1427.1111 Liability of First Handler

Two cotton associations cited the need for a shift in data liability from the gin to the producer when additional data must be gathered by the gin that the gin does not already have, such as acreage data. It was suggested that data be provided by producers on a form containing a self-certification clause that would shift liability and also provide documentation if an audit is necessary or if a dispute arises. CCC disagrees that liability should be shifted to the producer because the gin is the applicant and recipient of program benefits. Therefore this section is adopted as proposed.

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 (OMB).

Regulatory Flexibility Act

The Regulatory Flexibility Act does not apply to this rule because CCC is not required by 5 U.S.C. 553 or any other law to publish a notice of proposed rulemaking with respect to the subject of this rule.

Environmental Assessment

The environmental impacts of this rule have been considered consistent with the provisions of 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 1500-1508), and FSA's regulations for compliance with NEPA, 7 CFR part 799. To the extent these authorities may apply, CCC has concluded that this rule is categorically excluded from further environmental review as evidenced by the completion of an environmental evaluation. No extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement. A copy of the environmental evaluation is available for inspection and review upon request.

Executive Order 12988

The rule has been reviewed in accordance with Executive Order 12988. This proposed rule preempts State laws to the extent such laws are inconsistent with it. This rule is not retroactive. Before judicial action may be brought concerning this rule, all administrative remedies set forth at 7 CFR Parts 11 and 780 must be exhausted.

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

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does not apply to this rule because CCC is not required by 5 U.S.C. 553 or any other law to publish a notice of proposed rulemaking for the subject of this rule. Further, this rule contains no unfunded mandates as defined in sections 202 and 205 of UMRA.

Paperwork Reduction Act of 1995

A request for comments on the information collection needed for this program was part of the proposed rule. As stated above, several respondents commented that the proposed rule is much more complicated than previous cottonseed assistance programs and puts a much heavier administrative burden on cotton ginners, and requested that this burden be reduced. CCC explored options to ease the burden but all were determined to be fiscally irresponsible. However, CCC will assist gins in obtaining the data necessary and will provide time to gather data and to prepare applications for submission. The final information collection package has been approved by OMB and assigned OMB Control Number 0560-0256.

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 need to publish these regulations quickly, the forms and other information collection activities required to be utilized by a person subject to this rule are not yet fully implemented in a way that would allow the public to conduct business with CCC electronically. Accordingly, at this time, all forms required to be submitted under this rule may be submitted to CCC by mail or FAX.

List of Subjects in 7 CFR Part 1427

• Agriculture
• Cottonseed

For the reasons set out in the preamble, 7 CFR 1427 is amended as set forth below.

PART 1427—COTTON

1. The authority citation for 7 CFR part 1427 is revised to read as follows:

Authority: 7 U.S.C. 7231-7239; 15 U.S.C. 714b, 714c; Pub. L. 108-324, Pub. L. 108-447.

2. Revise the heading to subpart F to read as follows:

Subpart F—2004 Cottonseed Payment Program

3. Revise § 1427.1100 to read as follows:

4. In § 1427.1102 remove the definitions “Number of ginned cotton bales” and “Running bale.”

5. Revise § 1427.1103 to read as follows:

6. Amend § 1427.1104 by revising the section heading, revising paragraph (a) and in paragraph (c) by removing the term “low cottonseed prices” and adding “the loss of cottonseed,” in its place to read as follows:

7. Amend § 1427.1105 by revising the section heading and paragraph (b) to read as follows:

8. Revise § 1427.1106 to read as follows:

9. Revise § 1427.1107 to read as follows:

10. Revise § 1427.1108 to read as follows:

11. Revise § 1427.1109 to read as follows:

12. Amend § 1427.1111 by revising paragraph (d) to read as follows: