[Federal Register Volume 77, Number 109 (Wednesday, June 6, 2012)]
[Rules and Regulations]
[Pages 33289-33290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-13527]

Rules and Regulations
                                                Federal Register

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Federal Register / Vol. 77, No. 109 / Wednesday, June 6, 2012 / Rules 
and Regulations

[[Page 33289]]


Agricultural Marketing Service

7 CFR Part 28

[Doc. AMS-CN-12-0005]
RIN 0581-AD23

User Fees for 2012 Crop Cotton Classification Services to Growers

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.


SUMMARY: The Agricultural Marketing Service (AMS) will maintain user 
fees for cotton producers for 2012 crop cotton classification services 
under the Cotton Statistics and Estimates Act and the Cotton Standards 
Act of 1923 at $2.20 per bale--the same level as in 2011. This fee and 
the existing reserve are sufficient to cover the costs of providing 
classification services for the 2012 crop, including costs for 
administration and supervision.

DATES: Effective Date: June 7, 2012.

FOR FURTHER INFORMATION CONTACT: Darryl Earnest, Deputy Administrator, 
Cotton & Tobacco Programs, AMS, USDA, 3275 Appling Road, Room 11, 
Memphis, TN 38133. Telephone (901) 384-3060, facsimile (901) 384-3021, 
or email [email protected].


Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866; and, therefore has not been reviewed 
by the Office of Management and Budget (OMB).

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
There are no administrative procedures that must be exhausted prior to 
any judicial challenge to the provisions of this rule.

Regulatory Flexibility Act and Paperwork Reduction Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of 
this action on small entities and has determined that its 
implementation will not have a significant economic impact on a 
substantial number of small businesses.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions so that small businesses will not be 
disproportionately burdened. There are an estimated 25,000 cotton 
growers in the U.S. who voluntarily use the AMS cotton classing 
services annually, and the majority of these cotton growers are small 
businesses under the criteria established by the Small Business 
Administration (13 CFR 121.201). Continuing the user fee at the 2011 
crop level as stated will not significantly affect small businesses as 
defined in the RFA because:
    (1) The fee represents a very small portion of the cost-per-unit 
currently borne by those entities utilizing the services. (According to 
USDA's Economic Research Service, the U.S. average total cost of 
production in 2010 was $483 per bale. The user fee for classification 
services of $2.20 per bale represents less the one half percent of this 
average U.S. per-bale cost of production.);
    (2) The fee for services will not affect competition in the 
    (3) The use of classification services is voluntary. For the 2011 
crop, approximately 15.1 million bales were produced; and, almost all 
of these bales were voluntarily submitted by growers for the 
classification service; and
    (4) Based on the average price paid to growers for cotton from the 
2010 crop of 0.8212 cents per pound, 500 pound bales of cotton are 
worth an average of $410 each. The user fee for classification 
services, $2.20 per bale, is less than one percent of the value of an 
average bale of cotton.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320), which implement the Paperwork Reduction 
Act (PRA) (44 U.S.C. 3501-3520), the information collection 
requirements contained in the regulation to be amended is currently 
approved under OMB control number 0581-0008, Cotton Classing, Testing 
and Standards.

Fees for Classification Under the Cotton Statistics and Estimates Act 
of 1927

    This final rule establishes the 2012 user fee charged to producers 
for cotton classification at $2.20 per bale--the same as the 2011 user 
fee. The 2012 user fee was set in accordance to section 14201 of the 
Food, Conservation, and Energy Act of 2008 (Pub. L. 110-234) (2008 Farm 
Bill). Section 14201 of the 2008 Farm Bill provides that: (1) The 
Secretary shall make available cotton classification services to 
producers of cotton, and provide for the collection of classification 
fees from participating producers or agents that voluntarily agree to 
collect and remit the fees on behalf of the producers; (2) 
classification fees collected and the proceeds from the sales of 
samples submitted for classification shall, to the extent practicable, 
be used to pay the cost of the services provided, including 
administrative and supervisory costs; (3) the Secretary shall announce 
a uniform classification fee and any applicable surcharge for 
classification services not later than June 1 of the year in which the 
fee applies; and (4) in establishing the amount of fees under this 
section, the Secretary shall consult with representatives of the United 
States cotton industry. At pages 313-314, the Joint Explanatory 
Statement of the committee of conference for section 14201 stated the 
expectation that the cotton classification fee would be established in 
the same manner as was applied during the 1992 through 2007 fiscal 
years. Specifically, it states that the classification fee should 
continue to be a basic, uniform fee per bale fee as determined 
necessary to maintain cost-effective cotton classification service. 
Further, in consulting with the cotton industry, the Secretary should 
demonstrate the level of fees necessary to maintain effective cotton 
classification services and provide the Department of Agriculture with 
an adequate operating reserve, while also working to limit adjustments 
in the year-to-year fee.
    Under the provisions of section 14201, a user fee (dollar amount 
per bale classed) is established for the 2012 cotton crop that, when 
combined with other sources of revenue, will result in

[[Page 33290]]

projected revenues sufficient to reasonably cover budgeted costs--
adjusted for inflation--and allow for adequate operating reserves to be 
maintained. Costs considered in this method include salaries, costs of 
equipment and supplies, and other overhead costs, such as facility 
costs and costs for administration and supervision. In addition to 
covering expected costs, the user fee is set such that projected 
revenues will generate an operating reserve adequate to effectively 
manage uncertainties related to crop size and cash-flow timing while 
meeting minimum reserve requirements set by the Agricultural Marketing 
Service, which require maintenance of a reserve fund amount equal to at 
least four months of projected operating costs.
    The user fee charged to cotton producers for cotton classification 
in 2012 is $2.20 per bale, which is the same fee charged for the 2011 
crop. This fee is based on the preseason projection that 14,475,000 
bales will be classed by the United States Department of Agriculture 
during the 2012 crop year.
    Accordingly, Sec.  28.909, paragraph (b) reflects the continuation 
of the cotton classification fee at $2.20 per bale.
    As provided for in the 1987 Act, a 5 cent per bale discount will 
continue to be applied to voluntary centralized billing and collecting 
agents as specified in Sec.  28.909(c).
    Growers or their designated agents receiving classification data 
will continue to incur no additional fees if classification data is 
requested only once. The fee for each additional retrieval of 
classification data in Sec.  28.910 will remain at 5 cents per bale. 
The fee in Sec.  28.910(b) for an owner receiving classification data 
from the National Database will remain at 5 cents per bale, and the 
minimum charge of $5.00 for services provided per monthly billing 
period will remain the same. The provisions of Sec.  28.910(c) 
concerning the fee for new classification memoranda issued from the 
National Database for the business convenience of an owner without 
reclassification of the cotton will remain the same at 15 cents per 
bale or a minimum of $5.00 per sheet.
    The fee for review classification in Sec.  28.911 is maintained at 
$2.20 per bale.
    The fee for returning samples after classification in Sec.  28.911 
will remain at 50 cents per sample.

Summary of Comments

    A proposed rule was published in the Federal Register on April 11, 
2012, with a comment period of April 11, 2012 through April 26, 2012 
(77 FR 21684). AMS received two comments: One from a national trade 
organization that represents approximately 80 percent of the U.S. 
cotton industry, including cotton producers, ginners, warehousemen, 
merchants, cooperatives, cottonseed processors, and textile 
manufacturers from Virginia to California; and one from a national 
trade organization comprised of eight state and regional membership 
organizations that represent approximately 680 individual cotton 
ginning operations in 17 cotton-producing states. Comments from the 
national trade organizations expressed support for the decision to 
maintain the fee at the level established for the 2011 crop. Comments 
may be viewed at www.regulations.gov.
    Pursuant to 5 U.S.C. 533, good cause exists for not postponing the 
effective date of this final rule until 30 days after publication in 
the Federal Register because this rule maintains uniform user fees for 
2012 crop cotton classification services as mandated by the Cotton 
Statistics and Estimates Act, at the same level as 2011.

List of Subjects in 7 CFR Part 28

    Administrative practice and procedure, Cotton, Reporting and 
recordkeeping requirements, Warehouses.

    For the reasons set forth in the preamble, 7 CFR part 28 is amended 
to read as follows:


Subpart D--[Amended]

1. The authority citation for 7 CFR part 28, Subpart D, continues to 
read as follows:

    Authority:  7 U.S.C. 51-65; 7 U.S.C. 471-476.

2. In Sec.  28.909, paragraph (b) is revised to read as follows:

Sec.  28.909  Costs.

* * * * *
    (b) The cost of High Volume Instrument (HVI) cotton classification 
service to producers is $2.20 per bale.
* * * * *
3. In Sec.  28.911, the last sentence of paragraph (a) is revised to 
read as follows:

Sec.  28.911  Review classification.

    (a) * * * The fee for review classification is $2.20 per bale.
* * * * *

    Dated: May 30, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.
[FR Doc. 2012-13527 Filed 6-5-12; 8:45 am]