Cottonseed Payment Program

AGENCY:

Commodity Credit Corporation, USDA.

ACTION:

Proposed rule.

SUMMARY:

This rule proposes regulations to implement provisions of the Military Construction Appropriations and Emergency Hurricane Supplemental Appropriations Act, 2005, enacted on October 13, 2004 (“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.

DATES:

Comments on this rule must be received July 25, 2005 in order to be assured consideration. Comments on the information collection in this rule must be received by August 23, 2005 in order to be assured consideration.

ADDRESSES:

The Farm Service Agency invites interested persons to submit comments on this proposed rule and on the collection of information. Comments may be submitted by any of the following methods:

E-Mail: Send comments to chris.kyer@wdc.usda.gov

Fax: Submit comments by facsimile transmission to (202) 690-3307.

Mail: Submit comments to Grady Bilberry, Director, Price Support Division (PSD), Farm Service Agency (FSA), United States Department of Agriculture (USDA), STOP 0512, Room 4095-S, 1400 Independence Avenue, SW., Washington, DC 20250-0512.

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, PSD, FSA, USDA, Room 4095, 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 PSD Web site at http://www.fsa.usda.gov/dafp/psd.

Comments on the information collection requirements of this rule must also be sent to the addresses listed in the Paperwork Reduction Act section of this notice.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Background

Section 104 of Division B of the 2004 Act (Pub. L. 108-324), requires the Commodity Credit Corporation (CCC) 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 hurricanes. Section 789 of Division A of the Consolidated Appropriations Act, 2005 (Pub. L. 108-447) further amended section 104 of Division B of the 2004 Act by adding as eligible counties those which were declared disasters because of tropical storms. The 2004 Act appropriated $10 million for these payments. As amended, the provisions of section 104 read in full:

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.

Further, section 105 of Division B of the same Act provides that the funds, facilities and authorities of the CCC shall be used to carry out Section 104.

CCC most recently operated a Cottonseed Payment Program in 2003, the 2002-Crop Cottonseed Payment Program (68 FR 20332, April 25, 2003). This rule proposes that the 2004 Cottonseed Payment Program operate somewhat like the 2002 program in that payments will be made to cotton gins for distribution to eligible producers. However, the 2002 program was tied simply to previous year's production. Consistent with the terms of section 104 and other provisions of the same legislation, this rule proposes to provide payments for cottonseed loss in eligible counties based on a comparison of a producer's production in the year before the disaster (making the 2003 crop year the base year) to the amount produced in 2004, the year of the hurricanes. Generally, a gin's eligibility will be based on the lint lost to gins in deliveries of 2004-crop cotton because of reductions in lint production in eligible counties adjusted for changes in plantings and for crop losses due to other causes. This rule proposes special provisions for producers who for the 2004 crop were new producers, and for producers who delivered, or would have delivered, cotton to more than one gin. Accordingly, whereas previous cottonseed programs have covered all cottonseed, benefits here will be tied to losses of cottonseed because of eligible losses of delivered cotton lint in eligible disaster counties. Comment is invited on all aspects of the proposed regulations.

CCC will announce a period during which U.S. cotton gins may apply for cottonseed payments. To participate, cotton gins must complete an application form including: (1) Applicant name, address, and a contact person and phone; (2) bank account information for payees electing to have payments made by direct account deposit; (3) the gin 5-digit identifying code; (4) the weight (in pounds) of cotton lint for which payment is requested; and (5) the number of bales of cotton ginned from the applicable lint weight. CCC must receive the application within the announced application period.

So that the basic method of operation of the proposed rule is clear, the following example is offered:

Example:

1. Producer A grows 450 acres of 2004 cotton in an eligible county and gin A obtains 225,000 pounds of lint from that cotton. Producer A grew 500 acres of 2003 cotton, and gin A obtained 375,000 pounds of lint weight from the 2003 cotton.

2. Gin A calculates the producer's loss in lint weight was 112,500 pounds, taking into consideration the difference in acres between the two years and the difference in production by calculating the per-acre yield for each year and multiplying the difference in yield by the 2004 acres. The 112,500 pound loss is derived by multiplying the 450 acres of 2004 cotton by the 250-pound loss in lint yields per acre from 2004 to 2003.

3. Gin A calculates the loss for each of its customers and submits the total of the losses to FSA as a basis for payment. Producers who did not have a loss in yield are not included in the total amount submitted for payment.

Cases involving producers who might have been unable to deliver any cotton in 2004 to any gin because of the disaster are dealt with separately in the rule.

Upon receipt of all payment applications from all gins seeking to participate, CCC will estimate the national total quantity of cottonseed for payment based on the weight of cotton lint for which payment is requested. The payment rate per ton of cottonseed will be determined by dividing the $10 million available by the total quantity of cottonseed for payment. In order to be sure that an eligible producer is not over compensated (does not receive more than the total economic value of the loss suffered), payments to individual cotton gins will be subject to a payment limitation equal to the result of multiplying the total pounds of cottonseed determined eligible by the 2004 national average price of cottonseed ($112 per short ton).

CCC plans to provide all 2004-crop cottonseed payments to cotton gins and to require gins to share such payments with applicable cotton producers to the extent that the effect of cottonseed prices was borne by the producer rather than the gin. This payment plan is proposed because of the various agreements between ginners and producers regarding the costs of ginning and the disposition of the proceeds from the sale of cottonseed. These agreements were entered into prior to the ginning of 2004-crop cotton and the authorization of this cottonseed payment program, and CCC has no knowledge of their terms. Based on these existing contracts and marketing agreements, ginners and producers are best suited to equitably distribute the cottonseed assistance payments. However, producers dissatisfied with the distribution by the gin will, as in previous cottonseed programs, be limited to complaints directed toward the gin itself as may be allowed under law—that is, the regulations propose no administrative remedy.

In order to identify eligible production from designated counties, CCC will also ask gins to identify cotton production from designated counties versus that from non-designated counties and apply for only an eligible payment quantity. CCC believes that gins are well suited to be able to identify eligible production using existing systems and readily available data. Because of the nature of the interest involved in this notice it has been determined that the comment period should be limited to 30 days; that is, that a longer period would be contrary to the public interest.

Executive Order 12866

This proposed rule has been determined to be “Significant” under Executive Order 12866 and was reviewed by the Office of Management and Budget (OMB). A cost-benefit assessment of this rule was completed.

Regulatory Flexibility Act

The Regulatory Flexibility Act does not apply to this proposed 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 proposed 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 proposed 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

In accordance with the Paperwork Reduction Act of 1995, FSA intends to request approval by OMB of an information collection required to support the proposed rule establishing a 2004 crop year cottonseed payment program. Copies of the information collection may be obtained from Linda Turner, the Agency Information Collection Coordinator, at (202) 690-1855.

Title: 2004 Cottonseed Payment Program.

OMB Control Number: 0560-NEW.

Type of Request: Request for Approval of a New Information Collection.

Abstract: Section 104 of the 2005 Act requires the Commodity Credit Corporation 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 hurricanes and tropical storms. This rule is intended to implement this legislative mandate and assist producers who suffered financially as a result of unfavorable weather conditions in 2004 caused by hurricanes and tropical storms. Applicants are asked to provide: (1) The weight of lint to be used by CCC for determining seed weight for payment based upon calculation of a loss in lint production; (2) the number of bales ginned and applicable to the lint weight for which payment is requested, not adjusted to a uniform bale weight basis; and (3) basic data such as name and address, direct deposit information, and tax identification number. The information will be used by FSA to determine the program eligibility of the gin. FSA considers the information collected essential to prudent eligibility determinations and payment calculations. Additionally, without accurate information on lint weight and bale numbers, the national payment rate could be inaccurate and could result in payments being made to ineligible recipients, or overpayments, compromising the integrity and accuracy of the program.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 45 minutes per response.

Respondents: Cotton gins receiving 2004 crop cotton from counties declared a disaster by the President of the United States due to hurricanes and tropical storms.

Estimated Number of Respondents: 120.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 90 hours.

Proposed topics for comment include: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information collected; or (d) ways to minimize the burden of the collection of the information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments should be sent to Grady Bilberry, Director, Price Support Division, Farm Service Agency, United States Department of Agriculture, STOP 0512, 1400 Independence Avenue, SW., Washington, DC 20250-0512 or telephone (202) 720-7901.

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 proposed to be 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.

Subpart F—2004 Cottonseed Payment Program

2. Revise the title of part 1427 subpart F to read as set forth above:

3. Revise § 1427.1100 to read as follows: