[Federal Register: July 1, 2004 (Volume 69, Number 126)]
[Rules and Regulations]
[Page 39811-39814]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy04-1]
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Rules and Regulations
Federal Register
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[[Page 39811]]
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1435
RIN 0560-AH08
Flexible Marketing Allotments for Sugar
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: This final rule amends the sugar marketing allotment
regulations with respect to processors' marketings of sugar, the
permanent termination of processor operations, processors purchasing
assets of another processor, processors sharing allocations among
producers, appeals, and other related matters.
EFFECTIVE DATE: June 30, 2004.
FOR FURTHER INFORMATION CONTACT: Barbara Fecso, Dairy and Sweeteners
Analysis, Economic and Policy Analysis Staff, Farm Service Agency
(FSA), United States Department of Agriculture (USDA), Stop 0516, 1400
Independence Ave., SW., Washington, DC 20250-0516. Phone: (202) 720-
4146. E-mail: barbara.fecso@usda.gov. Persons with disabilities who
require alternative means for communication (Braille, large print,
audio tape, etc.) should contact the USDA Target Center at (202) 720-
2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Notice and Comment
Section 1601(c) of the Farm Security and Rural Investment Act of
2002 (Pub. L. 107-171, 116 Stat 183) (the 2002 Act) requires that the
regulations implementing Title I of the 2002 Act, which includes the
Sugar Program, are to be promulgated without regard to the notice and
comment provisions of 5 U.S.C. 553 or the Statement of Policy of the
Secretary of Agriculture effective July 24, 1971, (36 FR 13804)
relating to notices of proposed rulemaking and public participation in
rulemaking. These regulations are thus issued as final.
Discussion of Changes
Section 1403 of the 2002 Act amended the Agricultural Adjustment
Act of 1938 (7 U.S.C. 359aa et seq.) (the 1938 Act) to establish
flexible sugar marketing allotments. A final rule implementing the
regulations was published August 26, 2002 (67 FR 54926), and a
correction was published October 28, 2002 (67 FR 65690). In
administering the program, the Commodity Credit Corporation (CCC) has
determined that a few regulatory provisions require clarification.
The regulations at 7 CFR 1435.307(a)(3)(i) and (ii) describe
adjustments CCC makes to a sugar beet processor's weighted average
sugar production history for opening or closing a ``sugar factory''
during the base period. This rule clarifies that the provisions refer
to the opening or closing of a ``sugar beet processing factory,'' as
provided by sections 359d(b)(2)(D)(ii)(I) and (II) of the 1938 Act.
The regulations at 7 CFR 1435.307(d) provide that during any crop
year in which marketing allotments are in effect and allocated to
processors, the quantity of sugar and sugar products a processor
markets shall not exceed the quantity of the processor's allocation.
Section 1435.307(e) contains exceptions to that requirement. This rule
adds section 1435.307(e)(4) to clarify that the provision does not
apply to the sale of purchased sugar because the sugar would already
have been counted as part of the original processor's marketing.
The regulation at 1435.307(e)(3)(ii) permits a processor's
marketings to exceed its allocation if the marketing enables the
purchasing processor to fulfill its allocation and the marketing is
reported to CCC within 5 days of the date of sale. This rule extends
the time period to report the sale to 51 days because CCC is revising
its monthly survey forms to include these sales and eliminate the need
for separate reporting forms. Given the current schedule for submitting
the monthly forms, the sale of overallocation sugar may take place up
to 51 days before CCC receives the company monthly reports.
The regulations at 7 CFR 1435.307(f) provided that CCC may charge
liquidated damages on surplus allocation after sales made after May 1
of the crop year if the purchasing processor had surplus allocation
after May 1 because the purchasing processor provided incomplete or
erroneous information provided to CCC. This rule revises the section to
provide simply that CCC may charge liquidated damages on surplus
allocations after the end of the crop year, if a processor provides
incomplete or erroneous data that results in surplus allocation.
The regulations at 7 CFR 1435.308 are revised to add a new
provision with respect to the elimination of a processor's allocation
when there is a permanent termination of operations. Previously, Sec.
1435.308(b) provided that CCC will eliminate the allocation of a
processor that has been dissolved or liquidated in a bankruptcy
proceeding and will distribute the allocation to all other processors
on a pro rata basis. In addition to being dissolved or liquidated in
bankruptcy proceeding, another condition that will eliminate a
processor's allocation, ``permanently terminated operations,'' is
added. CCC will consider a processor to have permanently terminated
operations if it has ceased processing for 2 complete years or notifies
CCC that it has permanently terminated operations.
This rule clarifies that only processors that are not purchasing
all the assets of the selling processor must continue operation of the
purchased plants for the remainder of the initial season and the
following crop year. Purchasing processors that are purchasing all the
assets of the selling processor and new entrants are not required to
operate the acquired facilities for the required time period.
Section 1435.308(c) provided that if a processor purchasing
factories is not a new entrant, the purchased plants must operate for
the remainder of the initial season and the following crop year for the
purchasing processor to permanently obtain the allocation. It also
provided that CCC would reassign the allocation on a pro rata basis if
the purchased plants failed to operate for the required time period.
This section has been renumbered as Sec. 1435.308(d).
[[Page 39812]]
Section 1435.308(d) provided that if the purchasing processor is a
new entrant or a processor purchasing all the assets of the selling
processor, CCC shall immediately transfer allocation commensurate with
the purchased factories' production history with no requirement on
operating the facility for the required time period. This section has
been renumbered as Sec. 1435.308(c).
Section 1435.308(f) provides that new entrants not acquiring
existing facilities may apply to the Executive Vice President, CCC, for
an allocation. That provision is clarified to provide that new entrants
that are not acquiring existing facilities with production history in
the base period may apply for an allocation. Section 1435.308(f)(5) is
added to provide for a hearing in accordance with the statutory
requirement that a hearing be held on a new can sugar entrant's
application, if requested by interested parties.
Section 1435.310 is expanded to clarify the 1938 Act's requirement
in section 359f so that a processor's ``allocation will be shared among
producers served by the processor in a fair and equitable manner that
adequately reflects producers' production histories.'' CCC has
determined that cooperatively owned processors, not in a proportionate
share state, have met this requirement if they share their allocation
with their growers according to their cooperative agreement. CCC has
determined that, for a State subject to proportionate shares, a
processor will be in compliance with this requirement if it establishes
a priority system for payment that pays growers first for production on
proportionate share acreage, then for production on base acreage other
than the proportionate share acreage, then for production on non-base
acreage. Production from a grower with no production history at a mill
will be considered the same as production from non-base acreage, unless
the grower had an allocation release from a predecessor mill or was
designated by the mill as replacing sugarcane lost to the mill after
the 2001 crop year. In determining the payment priority in Louisiana,
processors may aggregate the acreage of an operator (producer making
the crop production decisions) across all the operator's farms
delivering cane to the processor. Growers should note that there is no
change to the requirements of Sec. 1435.318 that provide penalties for
farms exceeding their proportionate shares if proportionate shares are
in effect and a processor exceeds its allocation.
Clarifying this provision of the regulation will reduce uncertainty
about the effect the marketing allotment program has on the
relationship between growers and processors. This clarification should
also reduce arbitrations under the provision in the statute and
regulation that permits a grower to request Departmental arbitration of
disputes with processors.
Section 1435.319(b) concerns the appeal of issues arising under
sections 359d, 359f(b) and (c), and 359(i) of the 1938 Act and provides
that after reconsideration of an adverse decision by the Executive Vice
President, CCC, an adversely affected person may appeal the
determination and that any hearings with respect to the matter shall be
conducted by USDA's Judicial Officer. This section is revised to
clarify that appeals of decisions of the Executive Vice President, CCC
under section 359d are limited to the establishment of the allocations
of marketing allotments. This is in accordance with the limited
jurisdiction set forth in section 359i(a) of the 1938 Act. The language
in the regulation was never intended to provide broader appeal rights
than what was required under the statute and therefore is amended to
clarify this.
Executive Order 12866
This final 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).
Federal Assistance Programs
The title and number of the Federal assistance program found in the
Catalog of Federal Domestic Assistance to which this final rule applies
are Commodity Loans and Loan Deficiency Payments, 10.051.
Regulatory Flexibility Act
The Regulatory Flexibility Act is not applicable 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 matter of this rule.
Environmental Assessment
The environmental impacts of this rule were considered for the
sugar program final rule published in the Federal Register August 26,
2002 (67 FR 54926). This rule does not make changes that will affect
the Finding of No Significant Impact.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778. This
rule preempts State laws that are inconsistent with it. However, this
rule is not retroactive. Before judicial action may be brought
concerning this rule, all administrative remedies must be exhausted.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which require 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 about this
rule. Nonetheless, this rule contains no mandates as defined in
sections 202 and 205 of UMRA.
Small Business Regulatory Enforcement Fairness Act of 1996
Section 1601(c) of the 2002 Act requires that the regulations
necessary to implement Title I of the 2002 Act must be issued within 90
days of enactment and that such regulations shall be issued without
regard to the notice and comment provisions of 5 U.S.C. 533. Section
1601(c) also requires that the Secretary use the authority in section
808 of the Small Business Regulatory Enforcement Fairness Act of 1996,
Public Law 104-121 (SBREFA), which allows an agency to forego SBREFA's
usual 60-day Congressional review delay of the effective date of a
major regulation if the agency finds that there is a good cause to do
so. These regulations affect the planting and marketing decisions of a
large number of agricultural producers. Accordingly, this rule is
effective upon the date of filing for public inspection by the Office
of the Federal Register.
Paperwork Reduction Act
Section 1601(c) of the 2002 Act provides that the promulgation of
regulations and the administration of Title I of the 2002 Act shall be
done without regard to chapter 5 of title 44 of the United States Code
(the Paperwork Reduction Act). Accordingly, these regulations and the
forms and other information collection activities needed to administer
the program authorized by these regulations are not subject to review
by the Office of Management and Budget under the Paperwork Reduction
Act.
[[Page 39813]]
List of Subjects in 7 CFR Part 1435
Loan programs--agriculture, Price support programs, Reporting and
recordkeeping requirements, and Sugar.
0
For the reasons set out in the preamble, 7 CFR part 1435 is amended as
set forth below.
PART 1435--SUGAR PROGRAM
0
1. The authority citation continues to read as follows:
Authority: 7 U.S.C. 1359aa-1359jj and 7272 et seq.; 15 U.S.C.
714b and 714c.
0
2. In Sec. 1435.307, revise paragraphs (a)(3)(i) and (a)(3)(ii), (e)
and (f), and add paragraph (g) to read as follows:
Sec. 1435.307 Allocation of marketing allotments to processors.
(a) * * *
(3) * * *
(i) Increased 1.25 percent of the sum of all beet processors'
weighted average sugar production for opening a sugar beet processing
factory during the 1996 through 2000 crop years;
(ii) Decreased 1.25 percent of the sum of beet processors' weighted
average sugar production for closing a sugar beet processing factory
during the 1998 through 2000 crop years:
* * * * *
(e) Paragraph (d) of this section shall not apply to:
(1) Any sugar marketings to facilitate the export of sugar or
sugar-containing products;
(2) Any sugar marketings for nonhuman consumption; and
(3) Any processor marketings of sugar to another processor made to
enable the purchasing processor to fulfill its allocation if such
sales;
(i) Are made before May 1, and
(ii) Reported to CCC within 51 days of the date of sale.
(f) Paragraph (d) of this section also shall not apply to
marketings of purchased sugar marketed in the crop year of the
purchase, but does apply to marketings of sugar purchased as part of a
transaction pursuant to paragraph (e)(3) of this section.
(g) CCC may charge liquidated damages, as specified in a surplus
allocation survey and agreement, on surplus allocation after the end of
a crop year if the processor had surplus allocation because the
processor provided incomplete or erroneous information to CCC.
0
3. Revise Sec. 1435.308 to read as follows:
Sec. 1435.308 Transfer of allocation, new entrants.
(a) If a sugar beet or sugarcane processing facility is closed and
the growers that delivered their crops to the closed facility elect to
deliver their crops to another processor, the growers may petition the
Executive Vice President, CCC, to transfer the share of allocation
commensurate with the growers' production history from the processor
that closed the facility to their new processor. CCC may grant the
request to transfer the allocation upon:
(1) Written approval of the processing company that will accept the
additional deliveries, and
(2) Evidence satisfactory to CCC that the new processor has the
capacity to accommodate the production of petitioning growers.
(b) After a transfer of allocation described in paragraph (a) of
this section is completed, CCC will permanently eliminate the
processor's remaining allocation and distribute it to all other
processors on a pro-rata basis when the processor:
(1) Has been dissolved,
(2) Has been liquidated in a bankruptcy proceeding, or
(3) Has permanently terminated operations by:
(i) Not processing sugarcane or sugar beets for 2 consecutive
years, or
(ii) Notifying CCC that the processor has permanently terminated
operations.
(c) If a purchaser purchasing the assets of another processor is a
new entrant or is a processor purchasing all the assets of the selling
processor, then CCC shall immediately transfer allocation commensurate
with the purchased factories' production history.
(d) If a processor does not purchase all of the assets of another
processor, then the purchased factories must operate for the remainder
of the initial season and the following crop year for the purchasing
processor to permanently obtain the allocation. If the purchased
factories do not operate for this required time period, CCC shall
reassign the allocation to the other processors on a pro rata basis.
(e) Allocations, equal to the number of acres of proportionate
shares being transferred times the State's per-acre yield goal, will be
transferred between mills in proportionate share States, if the
transfers are based on:
(1) Written consent of the crop-share owners, or their
representatives,
(2) Written consent of the processing company holding the
allocation for the subject proportionate shares,
(3) Written consent of the processing company that will accept the
additional sugarcane deliveries, and
(4) Evidence, satisfactory to CCC, that the additional sugarcane
deliveries will not exceed the processing capacity of the receiving
company.
(f) New entrants, not acquiring existing facilities with production
history in the base period, may apply to the Executive Vice President,
CCC, for an allocation.
(1) Applicants must demonstrate their ability to process, produce,
and market sugar for the applicable crop year.
(2) CCC will consider adverse effects of the allocation upon
existing processors and producers.
(3) New entrant cane processors are limited to 50,000 short tons,
raw value, the first crop year.
(4) New entrant cane processors will be provided, as determined by
CCC:
(i) A share of their State's cane allotment if the processor is
located in Hawaii, Puerto Rico, Florida, Louisiana, or Texas, or
(ii) A share of the overall cane allotment if the processor is
located in any state not listed in paragraph (f)(4)(i) of this section.
(5) CCC will conduct a hearing on a new entrant application if an
interested processor or grower requests a hearing.
(6) If a new entrant acquires and reopens a factory that previously
produced beet sugar from sugar beets and sugar beet molasses, but the
factory last operated during the 1997 crop year, CCC will:
(i) Assign an allocation to the new entrant not less than the
greater of 1.67 percent of the adjusted weighted average quantities of
beet sugar produced by all processors during the 1998 through 2000 crop
years, as determined under Sec. 1435.307, or 1,500,000 hundredweight.
(ii) Reduce all other beet processor allocations on a pro rata
basis.
0
4. In Sec. 1435.310, redesignate paragraph (b) as paragraph (e) and
add new paragraphs (b), (c) and (d) to read as follows:
Sec. 1435.310 Sharing processors' allocations with producers.
* * * * *
(b) CCC will determine that a processor in a proportionate share
state has met the conditions of paragraph (a) of this section if the
processor establishes a grower payment plan that incorporates the
following provisions:
(1) Pays growers for sugar from their delivered sugarcane in the
following priority:
(i) Sugar production from proportionate share acreage; as
established under Sec. 1435.311, for producers determined by CCC, who;
(A) Delivered to the mill in at least one of the crop years 1999,
2000, or 2001,
(B) Obtained an allocation transfer from a predecessor mill, or
[[Page 39814]]
(C) Have been designated by the mill to supply sugarcane replacing
sugarcane lost to the mill since the 2001 crop year,
(ii) Sugar production from base acreage, as established under Sec.
1435.312, but exclusive of the acreage described in paragraph (b)(1)(i)
of this section, for producers who meet the requirements of paragraph
(b)(1)(i) of this section, then
(iii) All other sugar production.
(2) If a mill cancels a producer's contract, the mill must permit
the producer to move an allocation commensurate with the producer's
production history to a mill of the producer's choice.
(3) In determining the payment priority, a processor may aggregate
the acreage of an operator (producer making the crop production
decisions) across all the operator's farms delivering cane to the
processor.
(c) CCC will determine that a processor not in a proportionate
share state, which is cooperatively owned by producers, has met the
conditions of paragraph (a) of this section if the processor shares its
allocation with its producers according to its cooperative membership
agreement.
(d) CCC will disclose farm base and reported acres data in a
proportionate share state to processors upon their request for growers
delivering to their mill. In the case of multiple producers on a farm
or growers delivering to more than one mill, subject mills will be
responsible for coordinating proportionate share data.
* * * * *
0
5. In Sec. 1435.319, revise paragraph (b) to read as follows:
Sec. 1435.319 Appeals and arbitration.
* * * * *
(b) For issues arising under section 359d establishing allocations
for marketing allotments, and sections 359f(b) and (c), and section
359i of the Agricultural Adjustment Act of 1938, as amended, after
completion of the process provided in paragraph (a) of this section, a
person adversely affected by a reconsidered determination may appeal
such determination by filing a written notice of appeal within 20 days
of the issuance of the reconsidered determination with the Hearing
Clerk, USDA, Room 1081, South Building, 1400 Independence Ave., SW.,
Washington, DC 20250-9200. Any hearing conducted under this paragraph
shall be in accordance with instructions issued by USDA's Judicial
Officer.
* * * * *
Signed in Washington, DC, on June 25, 2004.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 04-14900 Filed 6-30-04; 8:45 am]
BILLING CODE 3410-05-M