[Federal Register Volume 77, Number 64 (Tuesday, April 3, 2012)]
[Rules and Regulations]
[Pages 19925-19927]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7990]



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Rules and Regulations
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Federal Register / Vol. 77, No. 64 / Tuesday, April 3, 2012 / Rules 
and Regulations

[[Page 19925]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1427

RIN 0560-AI16


Upland Cotton Base Quality

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

ACTION: Final rule.

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SUMMARY: This rule makes technical changes to the Commodity Credit 
Corporation (CCC) upland cotton marketing assistance loan (MAL) 
regulations to revise certain grade and quality references. Changes 
include revising references to specific quality characteristics of 
certain base quality grades to simply a reference to the ``base 
quality'' of the grade without further specification. CCC uses base 
quality to calculate upland cotton loan rates, Adjusted World Price 
(AWP), and related adjustments. This change will accommodate any future 
changes to the base quality specifications that define the base quality 
characteristics of a particular grade. This rule also changes a broad 
reference of a base grade to a more specific reference that names the 
particular relevant grade. None of these changes involve a change of 
policy and would not have affected any program determinations in past 
crop years, had these changes been in place at the time. They improve 
the regulations by maintaining consistency with base quality 
specifications as that may change in the future. This amendment will 
apply starting with the 2012 crop.

DATES: Effective date: April 3, 2012.

FOR FURTHER INFORMATION CONTACT: Gene Rosera, Economic and Policy 
Analysis Staff, FSA; telephone (202) 720-8837, email: 
gene.rosera@wdc.usda.gov. Persons with disabilities who require 
alternative means for communications (Braille, large print, audio tape, 
etc.) should contact the USDA Target Center at (202) 720-2600 (voice 
and TDD).

SUPPLEMENTARY INFORMATION:

Background

    The Farm Service Agency (FSA) operates an upland cotton MAL program 
for upland cotton using CCC funds. The base quality loan rate is set in 
section 1201 of the Food, Conservation, and Energy Act of 2008 (the 
2008 Farm Bill, Pub. L. 110-246) at 52 cents a pound for the 2008 
through 2012 crop years. Loan rates for individual bales depend on the 
grade of the cotton and the quality within the grade. The grades 
referenced in this rule are Middling (M), Strict Middling (SM), and 
Strict Low Middling (SLM). The loan schedule provides a base grade that 
produces a loan rate of 52 cents per pound at base quality. That base 
grade is SLM 1\1/16\-inch, leaf 4 cotton. Producers can either forfeit 
the cotton in satisfaction of the loan or repay the loan at a rate that 
is based, generally, on a calculated AWP. Repayment rates are adjusted, 
like the loan rates themselves, based on grade and quality within the 
grade. FSA uses measures of strength and length uniformity in 
determining the price support value of a bale of upland cotton. The 
base-quality ranges for these factors are those for which loan rate 
premiums and discounts do not apply. The calculations specified in 
Sec.  1427.25(c)(2) are used to make an overall adjustment in basic 
repayment rates for cotton loans while Sec.  1427.25(e)(2)(ii) and 
(f)(2)(ii) are directed at coarse count and fine count adjustments, 
respectively, in the repayment rates for certain cotton grades.
    Prior to this rule, the cotton regulations specified in 7 CFR part 
1427 that various AWP adjustments be made based on comparisons between 
certain loan rates for base qualities of certain grades. However, 
rather than simply refer to the ``base quality'' those specific 
qualities of the base grade (micronaire, length uniformity, and 
strength) are stated in the rules. That specificity creates technical 
problems if the loan schedules and base grade specifications are 
changed. CCC establishes upland cotton base quality ranges 
administratively, based in part on the ranges reported by the cotton 
industry to the USDA Agricultural Marketing Service (AMS). AMS can and 
does change the specification of ``base quality'' cotton in response to 
observed market valuation of quality attributes. By replacing the 
specific ranges with the term ``base quality,'' CCC's use of the term 
in the regulation remains consistent with AMS in the future.
    Prior to this rule, Sec.  1427.25(c) made an adjustment, ``between 
the applicable loan rate for an upland cotton crop for M 1\3/32\-inch, 
leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 
through 29.4 grams per tex, length uniformity 79.5 through 82.4 
percent) cotton and the loan rate for base quality upland cotton.'' 
This rule addresses, first, the specification in Sec.  1427.25(c)(2) 
regarding the references to M 1\3/32\-inch, leaf 3. This rule 
eliminates the base quality specifications in the regulation 
(micronaire 3.5 through 3.6 and 4.3 through 4.9, etc.). The text 
regarding that grade is being changed to simply refer to ``base quality 
M 1\3/32\-inch, leaf 3.'' Should the specifications for base quality 
for ``M 1\3/32\-inch, leaf 3'' change in the future, there will be no 
need to change the regulations.
    Second, this rule makes another change to Sec.  1427.25(c)(2). The 
regulation as quoted above refers to comparing the applicable ``M 1\3/
32\-inch, leaf 3'' loan rate to ``the loan rate for base quality upland 
cotton.'' That reference in Sec.  1427.25(c)(2) to ``base quality 
upland cotton'' is to the base grade for upland cotton MALs--as noted 
above--namely, base quality SLM 1\1/16\-inch, leaf 4 cotton. So that 
the regulations may be specific and not create confusion with the 
``base quality'' references that are being added with respect to other 
grades, this rule changes the reference in Sec.  1427.25(c)(2) to 
``base quality upland cotton'' to a specific reference to ``base 
quality SLM 1\1/16\-inch, leaf 4 cotton.'' With these two changes, the 
regulations in Sec.  1427.25(c)(2) will provide for a comparison 
``between the applicable loan rate for an upland cotton crop for base 
quality M 1\3/32\-inch, leaf 3 cotton and the loan rate for an upland 
cotton crop for base quality SLM 1\1/32\-inch, leaf 4 cotton.'' Had 
that language been in place in 2011, there would have been no change in 
adjusted price determinations specified in Sec.  1427.25(c)(2). The 
same will be true in 2012 and thereafter if there is no change to the 
base quality specifications for the ``M 1\3/32\-inch, leaf 3'' and 
``SLM 1\1/32\-

[[Page 19926]]

inch, leaf 4'' grades. But if there are changes, then no conforming 
adjustment in the regulations will be needed since the changes in the 
base quality specifications would be incorporated, in effect, by the 
generic reference to the ``base quality'' of those two grades. The base 
qualities of the grades will be whatever the standards current at that 
time specify.
    Similarly, in Sec.  1427.25(e)(2)(ii) and (f)(ii) of the 
regulations there are other references to the ``M 1\3/32\-inch, leaf 
3'' grade like the one to that grade in Sec.  1427.25(c)(2)--that is, 
with the specific qualities of the base grade set out. There are also 
similar references with similar specificity regarding the grade ``SLM 
1\1/32\-inch, leaf 4'' in Sec.  1427.25(e)(2)(ii) and grade ``SM 1\1/
8\-inch, leaf 2'' in Sec.  1427.25 (f)(2)(ii). As with the change 
regarding grade ``M 1\3/32\-inch, leaf 3'' in Sec.  1427.25(c)(2), the 
references to base quality for that grade and the other grades Sec.  
1427.25(e)(2)(ii) and (f)(2)(ii) are modified to replace the 
specification for base quality with a reference to the use of the 
``base quality'' grade in the comparison (whatever those specifications 
have been). Therefore, this rule changes the reference in Sec.  
1427.25(e)(2)(ii) to a comparison ``between the applicable loan rate 
for an upland cotton crop for M 1\3/32\-inch, leaf 3, (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per 
tex, length uniformity 80 through 82 percent) cotton and the loan rate 
for an upland cotton crop for SLM 1\1/32\-inch, leaf 4, (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per 
tex, length uniformity 79.5 through 82.4 percent) cotton'' to a 
comparison ``between the applicable loan rate for an upland cotton crop 
for base quality M 1\3/32\-inch, leaf 3 cotton and the loan rate for an 
upland cotton crop for base quality SLM 1\1/32\-inch, leaf 4 cotton.''
    Likewise, this rule changes the comparison in Sec.  
1427.25(f)(2)(ii) from a comparison ``between the applicable loan rate 
for an upland cotton crop for M 1\3/32\-inch, leaf 3, (micronaire 3.5 
through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per 
tex, length uniformity 79.5 through 82.4 percent) cotton and the loan 
rate for an upland cotton crop for SM 1\1/8\-inch, leaf 2, (micronaire 
3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams 
per tex, length uniformity 79.5 through 82.4 percent) cotton'' to 
specify that it is a comparison ``between the applicable loan rate for 
an upland cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton 
and the loan rate for an upland cotton crop for base quality SM 1\1/8\-
inch, leaf 2 cotton.''
    Neither of these changes in Sec.  1427.25(e)(2)(ii) and (f)(2)(ii) 
would have affected, had they been in place earlier, previous 
determinations of loan repayment rates. However like the Sec.  
1427.25(c)(2) changes, these changes accommodate future changes in what 
constitutes ``base quality'' in the specific grades listed there.

Notice and Comment

    These regulations are exempt from the notice and comment 
requirements of the Administrative Procedure Act (5 U.S.C. 553), as 
specified in section 1601(c)(2) of the 2008 Farm Bill, which requires 
that the regulations to implement Title I of the 2008 Farm Bill be 
promulgated and administered 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. 
Also, this rule is technical in nature, not substantive, and a delay in 
implementing this rule would be contrary to the public interest.

Executive Order 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility.
    The Office of Management and Budget (OMB) designated this rule as 
not significant under Executive Order 12866, ``Regulatory Planning and 
Review,'' and therefore has not reviewed this rule.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to the notice and comment 
rulemaking requirements under the Administrative Procedure Act (5 
U.S.C. 553) or any other statute, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. This rule is not subject to the Regulatory 
Flexibility Act because CCC is not required to publish a notice of 
proposed rulemaking for this rule.

Environmental Review

    The environmental impacts of this rule have been considered in a 
manner consistent with the provisions of the National Environmental 
Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations 
for compliance with NEPA (7 CFR part 799). The technical corrections 
identified in this final rule do not change the structure or goals of 
the program and can be considered simply administrative in nature. 
Therefore, FSA has determined that NEPA does not apply to this final 
rule and no environmental assessment or environmental impact statement 
will be prepared.

Executive Order 12372

    This program is not subject to Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' which requires 
consultation with State and local officials. See the notice related to 
7 CFR part 3015, subpart V, published in the Federal Register on June 
24, 1983 (48 FR 29115).

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' The provisions of this rule will not have preemptive 
effect with respect to any State or local laws, regulations, or 
policies that conflict with such provision or which otherwise impede 
their full implementation. The rule will not have retroactive effect. 
Before any judicial action may be brought regarding this rule, all 
administrative remedies must be exhausted.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' The policies contained in this rule would not have any 
substantial direct effect on States, the relationship between the 
Federal Government and the States, or the distribution of power and 
responsibilities among the various levels of government. Nor would this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

[[Page 19927]]

Executive Order 13175

    This rule has been reviewed for compliance with Executive Order 
13175, ``Consultation and Coordination with Indian Tribal 
Governments.'' Executive Order 13175 imposes requirements on the 
development of regulatory policies that have tribal implications or 
preempt tribal laws. The policies contained in this rule do not preempt 
Tribal law. USDA continues to consult with Tribal officials to have a 
meaningful consultation and collaboration on the development and 
strengthening of USDA regulations.

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions on State, local, and Tribal governments or the 
private sector. Agencies generally must prepare a written statement, 
including a cost benefit analysis, for proposed and final rules with 
Federal mandates that may result in expenditures of $100 million or 
more in any 1 year for State, local, or Tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule. This 
rule contains no Federal mandates, as defined under title II of the 
UMRA, for State, local, and Tribal governments or the private sector. 
Therefore, this rule is not subject to the requirements of sections 202 
and 205 of UMRA.

Small Business Regulatory Enforcement Fairness Act

    OMB has designated this rule as not significant. As a result, this 
rule is not considered a major rule under SBREFA and FSA is not 
required to delay the effective date for 60 days from the date of 
publication to allow for Congressional review. Accordingly, this rule 
is effective on the date of publication in the Federal Register.

Federal Assistance Programs

    The title and number of the Federal assistance program in the 
Catalog of Domestic Federal Assistance to which this rule will apply is 
Commodity Loan and Loan Deficiency Payments--10.051.

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and administered without regard to the 
Paperwork Reduction Act.

E-Government Act Compliance

    CCC is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government Information 
and services, and for other purposes.

List of Subjects in 7 CFR Part 1427

    Cotton, Cottonseeds, Loan programs--agriculture, Packaging and 
containers, Price support programs, Reporting and recordkeeping 
requirements, Surety bonds, Warehouses.

    For the reasons discussed above, this rule amends 7 CFR part 1427 
as follows:

PART 1427--COTTON

0
1. The authority for part 1427 continues to read as follows:

    Authority:  7 U.S.C. 7231-7236 and 8737; and 15 U.S.C. 714b, and 
714c.


0
2. Amend Sec.  1427.25 by revising paragraphs (c)(2), (e)(2)(ii), and 
(f)(2)(ii) to read as follows:


Sec.  1427.25  Determination of the prevailing world market price and 
the adjusted world price for upland cotton.

* * * * *
    (c) * * *
    (2) The price determined as specified in paragraph (c)(1) of this 
section will be adjusted to reflect the price of base quality upland 
cotton by deducting the difference, as CCC announces, between the 
applicable loan rate for an upland cotton crop for base quality M 1\3/
32\-inch, leaf 3 cotton and the loan rate for base quality SLM 1\1/16\-
inch, leaf 4 cotton.
* * * * *
    (e) * * *
    (2) * * *
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SLM 1\1/32\-inch, leaf 
4 cotton.
* * * * *
    (f) * * *
    (2) * * *
    (ii) The difference between the applicable loan rate for an upland 
cotton crop for base quality M 1\3/32\-inch, leaf 3 cotton and the loan 
rate for an upland cotton crop for base quality SM 1\1/8\-inch, leaf 2 
cotton.
* * * * *

    Signed on March 28, 2012.
Bruce Nelson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2012-7990 Filed 4-2-12; 8:45 am]
BILLING CODE 3410-05-P